ZingPowZing v bowlhead challenge

Aegis

ZingPowZing wrote: »

My financial adviser calculated the critical yield to the age of 63 (mine).
Unfortunately, not a long hop.

Presumably that was to compare an investment-based pension to an annuity purchase at a scheme normal retirement date, i.e. checking what investment return you'd need over the term to match benefits on a like-for-like basis. Given it's supposed to be a long-term measure, when it's done over a short term it's essentially meaningless, particularly if your actual intention is to secure an income for life by buying an annuity. Under such circumstances, the annuity critical yield should be supplemented by the much more important drawdown critical yield which should look over a reasonable estimate of your remaining life and will therefore give much more useful information about whether you ought to transfer or remain in place (the latter being the assumed best position unless conclusively shown otherwise).

bowlhead99

squirrelpie wrote: »

What exchange rates are being used for the US stocks?

I assume an end of day spot rate will be fine for any future values and the eventual terminal value; we have already converted the prices above at an agreed rate.

And what dealing charges/duties are included for all stocks?

The 4 stock portfolio will have 4 times as many dealing charges but as we are pretending to invest £160k, the dealing costs to place the additional 3 purchases at the start and 3 sales at the end is pretty immaterial.

The 4-stock portfolio has fx translation costs on half the portfolio which is probably half a percent each way at £40k deal sizes with typical retail brokers. However that half of the 4-stock portfolio will escape stamp duty, which is half a percent to buy RIT (though nothing to sell). So the overall dealing costs for buying and selling RIT will be lower, but assuming there is no heavy dealing and churning of the portfolio, we can generously ignore the extra costs on the 4 stock portfolio(s).

squirrelpie wrote: »

The offer is 2050
What we really need is to see what the opening price is tomorrow morning, since that's the earliest they can be bought.

True, the closing offer was 2050 and closing bid was 2045. The 2055 price I quoted was what was shown on yahoo, google and londonstockexchange.com as the last reported trade. The last reported trade was a late reported off book trade and is more than you would have paid placing a trade at 16.29 and 59 seconds, but given a £160k trade is about 8x normal market size for this stock, I am happy to leave it at that price to avoid being contentious, as it is to my detriment rather than to my favour.

Thrugelmir

ZingPowZing wrote: »

So, my four stocks are

AApl 166.60
Microsoft 110.40
BHP 1772
Glaxo 1645

Aapl and Glaxo currently ex-dividend, all further dividends to accrue.

Care to add some commentary behind the choices ?

My pennys worth - Glaxo and BHP may do little more than treadwater.

atush

OOh, defensive. Expecting turbulent markets.

Good choice, this is one of my defensive ones in a Sipp i set up this year.

beamyup

In the post the OP says
"bowlhead has faith in a multi asset fund"

In my opinion RIT Capital Partners PLC is NOT a "normal" multi asset fund - it is a very high cost, possibly non-liquid, highly actively managed speculative fund.

If this "outperform"s, it will be a miracle. However there is no relevant benchmark and the investments are difficult to properly understand (to me at least). How is this fund linked to SJP? seems like it would be ideal for them!

If I had a IFA and if they recommended this investment to me, I would show them the door.

Talking Multi Asset - What is the bond to share ratio for RIT Capital Partners PLC? I think its approx 100% shares?

And - according to
https://doc.morningstar.com/document/bb90ff29274a3d5f5989f61d1a19804c.msdoc/?clientid=ajbell&key=805803a4ca9fc338
the total charges/fees/costs are around 3.91% - that is HUGE and that is why I wanted to understand your choice a bit more

bowlhead - what is your "strategy"? is it multi asset or highly managed? how would you best describe?

IvanOpinion

Purely contributing to keep an eye on this thread. I have read many of Bowlheads detailed explanations and found them to be very helpful. I know this is very unscientific and a bit of fun but I am hoping it will be interesting to see how things develop - especially as we approach what is expected to be a bit of market turbulence.

PS: could this be made a sticky at the top of the forum?

bowlhead99

beamyup wrote: »

Talking Multi Asset - What is the bond to share ratio for RIT Capital Partners PLC? I think its approx 100% shares?

Well, in post #19 I said where you would be able to see the most recent published list of holdings, which are split between stock market quoted equity, direct private holdings, holdings of private equity funds, absolute return and credit funds, real assets, and government bonds.

You could perhaps summarise it as 43.8% listed equity, 26.1% private equity, approx 30% not equity. Although it is more complex than that as some positions have exposure greater than their NAV, and there is about 11% cash/margin supported by 11% of borrowings.

And - according to
https://doc.morningstar.com/document/bb90ff29274a3d5f5989f61d1a19804c.msdoc/?clientid=ajbell&key=805803a4ca9fc338
the total charges/fees/costs are around 3.91% - that is HUGE

The ongoing charges figure for 2018 using AIC guidelines was 0.68%. There is also exposure to management fees in the underlying investee funds it holds, estimated at about 1.03% for 2018. So about 1.7% all in, handing a huge advantage to the management-fee-free 4-share portfolio for the meaningless 1-year comparison.

As an accountant, I am somewhat old-school and consider the key running costs to be the ones that go through the face of the profit and loss account, and OCF/ management fee exposure is broadly fine for that purpose, acknowledging its limitations.

Everything else not captured in OCF (transaction costs, performance fees and the like) still gets accounted for in the overall performance, on which the fund is judged - so contriving a 'transaction fees' figure based on what your transactions might be, or telling you what the exposure to performance fees or carried interest in underlying funds might be if we were to imagine we achieved a particular level of outperformance, or what the interest cost might be if we borrow, etc, can have limited usefulness.

Is it multi asset or highly managed? how would you best describe?

Of course it is multi asset as you can see from the multiple types of assets it holds.

It is managed by a board of directors and management company, and where it takes exposure to investments through other investment vehicles (ITs, funds, private partnerships), those vehicles will also be managed.

You could describe it as a mixed asset closed-ended collective investment scheme structured as an investment trust.

bowlhead99

IvanOpinion wrote: »

PS: could this be made a sticky at the top of the forum?

I hope not, as a meaningless track of a fund versus a 4-share portfolio over an arbitrary one year period has very minimal relevance to the many thousands of people who visit a 'Pensions, Annuities and Retirement Planning' forum.

Making it a sticky so that everyone who came to the board wondering about retirement or pension options had to first scroll past some kids having a discussion about their meaningless short-term numbers, would devalue the quality of the forum and have people popping up from time to time to say 'why is this a sticky'.

We can go away and then find it again in a year if there's an appetite to discuss it further.

cfw1994

beamyup wrote: »

can we also track some kind of more "normal" benchmark aligned fund, and if that wins then you both pay £100 to charity?
e.g. LS100

Well, just for reference it looks like that is £224.57.....

An interesting thread, for sure. 1 year is a short time for this kind of thing, of course, no point having is as sticky....but bookmarked!

Lokolo

I feel as though ZingPowZing will win this if it is over the short term. But if we looked at years, I reckon bowlhead will easily come out on top.

Aren't investments meant to be longterm?