What % of your portfolio are active vs passive funds?

stphnstevey

bowlhead99 wrote: »

Should those companies together be 22% of your portfolio? They are that proportion of EQQQ.

...Microsoft, Amazon and Google will together be 30%.

Linton already noted:

NASDAQ top 5 companies account for 45% of the total

LTGE top 5 companies are 34% of the total

Which is not much difference in the big scheme of things

No one is advocating NASDAQ 100 (in the same way as no one is advocating LTGE) to be your sole constituent of your portfolio, but maybe as a growth consideration, in moderation, they both could be used to fulfil a niche, but with different considerations

I think my "stirring the passive vs active pot" has detracted from others showing their passive or active hands, which as I said before, was the most interesting, so I will slink away to the cyber ether and hopefully watch the wildlife again

bostonerimus

Part of the reason I avoid active funds is that I think that they are far more prone to hubris in managers than index funds. I'm sure we can all point to one massive recent example. There will undoubtedly be others and people who own those funds will be sorry, but there will be some funds where that same hubris is rewarded with excellent returns. I don't like to gamble and most retail investors are not equipped to basically choose between and Woodford and a Fundsmith.....although I'm betting (irony intended) that Fundsmith will see some reversals and get some headlines eventually.

So I take the risk of active management mostly out of my portfolio and stick with indexes.

talexuser

The problem with Woodford was not necessarily that he failed, but that he was continually recommended up to the point of failing to many novice investors, after many others had put sell notices out, and DIY investors who kept an eye on things sold out at a good profit some time ago. If you don't have the time to keep an eye on your DIY stuff then obviously passive must be the way to go.

bostonerimus

talexuser wrote: »

The problem with Woodford was not necessarily that he failed, but that he was continually recommended up to the point of failing to many novice investors, after many others had put sell notices out, and DIY investors who kept an eye on things sold out at a good profit some time ago. If you don't have the time to keep an eye on your DIY stuff then obviously passive must be the way to go.

This is exactly my point. Most investors aren't financial geeks and need a simple, and sensible way to invest. The finance industry likes to make things seem complicated, often to justify their fees and numerology. There's no doubt that active portfolios can produce great results, but they can also spectacularly fail and whether that's a matter of science and analysis or just good or bad luck is a continuing debate. So for the geeks I can see how an active portfolio is attractive, but for the regular person, just looking to put some money away, I think passive is the best way to go.

Having said that there is a world of difference between Woodford and a decades old IT that has a conservative approach and is strictly run. In fact my only active fund, Vanguard Wellesley, is one such long lived boring fund in that it was started in 1970 and it's portfolio is investment-grade corporate bonds and US. government bonds and large-cap, dividend-paying stocks.

Sue58

bowlhead99 wrote: »

I have a number of funds which are regionally focused, mixed asset or industry sector specialists.

The ones that are properly global equity (meaningful amounts of US, Europe and Asia) without being mixed asset or dedicated to one industry sector are:

Public equities:
Scottish Mortgage Investment Trust (SMT)
iShares MSCI World Size Factor ETF GBP (IWFS)

Private equities:
Harbourvest Global Private Equity (HVPE)
Pantheon International PLC (PIN)

Although SMT does have 20% unlisted holdings and has its favourite sectors.

Thanks bowlhead. Please may I ask you the main differences in world ETF’s between IWFS and SWDA and VWRL or are they all very similar?

StellaN

I think SWDA is developed world only.

MPN

Sue58 wrote: »

Thanks bowlhead. Please may I ask you the main differences in world ETF’s between IWFS and SWDA and VWRL or are they all very similar?

SWDA is an accumulating ETF whereas VWRL distributes dividends. As StellaN mentioned SWDA is developed world only. No knowledge of IWFS though?

bowlhead99

Sue58 wrote: »

Thanks bowlhead. Please may I ask you the main differences in world ETF’s between IWFS and SWDA and VWRL or are they all very similar?

Aside from the differences in dividends mentioned by MPN:

VWRL is FTSE All-World (including larger companies in emerging markets) while SWDA is MSCI World, which doesn't have emerging markets. Both allocate the money weighted to the market capitalisation of the companies in the index.

IWFS (or IWSZ for the version priced in dollars) is a Mid-Cap index, tracking MSCI World Mid Cap Equal Weighted Index.

It uses MSCI World as a base (so doesn't have emerging markets) and then it strips out the very largest and smallest companies to get the ones in the middle (approx 900 holdings) and then it gives them all the same weight. It rebalances semi annually.

With 900 holdings you would expect most holdings to be about 0.11% of the fund at a rebalance point. In between the rebalances at the end of May and November, some companies will grow and some will shrink. So for example Hargreaves Lansdown would have started at 0.11% at the end of May with everything else, but has currently dropped to 0.08 following their heavy share price drop. While e.g. Tableau has gone up to 0.15% since it was announced in June that Salesforce were acquiring them. Merlin Entertainment and Snap are others that have got more valuable with Snap recovering from its record post-IPO lows at the back end of last year.

At the next November rebalance, if the prices remain you would see Snap and Merlin sliced downwards with more added to HL to bring them all back to equal weight. In this way, you don't get the strange concentration effects of having say 1000x as much in the largest holdings as the smallest ones. This gives relatively greater exposure to small cap index constituents versus the parent index where larger-cap constituents have a more dominant effect on index valuations.

USD cumulative net returns for MSCIWorld Mid Cap Equal Weighted over last 15 years to end of June took $100 to $309.57 vs $277.19 for normal MSCI World, with maximum drawdown in the 2007-9 credit crunch of 59.5% vs 57.8%. Those figures are for the index itself rather than for any fund which tracks it.

enthusiasticsaver

Thrugelmir wrote: »

That's some turnaround. Why the dramatic change of heart?

The portfolio is quite large and we have decided to sign up with an IFA who is now managing it. The investments in VLS60 have been sold and are in the process of being moved to a moderately cautious portfolio through the IFA. They have different models according to investment risk.

We have seen figures to show their current models outperform the VLS60 although of course costs will be higher especially in year 1 with initial fees. He did acknowledge however that our investments in VLS60 had done a lot better than many of the relative novice investors he sees. I just did not want the worry any more about whether I was doing the best with it and decided for 5 years to invest through the IFA. He has allocated it across 11 active funds and has done the same with my SIPP and we are transferring an old DB pension of mine and DHs S and S ISA and DC pension.


When I first started investing I was just putting in a monthly amount and then transferring old cash isas and then lump sums from pensions so now the figure is larger than I feel comfortable investing on a diy basis. Hopefully we have done the right thing.

AnotherJoe

I sugegst you start tracking VLS60 against your whole portfolio including costs and take a view over time on how its doing.