My passive investment experiment

chrisgg

DrSyn wrote: »

Fidelity is a fund supermarket and this is their loss leader. It just goes to show how much profit they must be making on the active funds if they can afford to do this.

Fidelity still levy a platform charge, and the fund is only available on their own platform.

bostonerimus

chrisgg wrote: »

Fidelity still levy a platform charge, and the fund is only available on their own platform.

There is hope, I might still be ahead, no platform or transaction fees for me on VTSAX as I own it on the vanguard platform, just the 0.04% fund fee.

londoninvestor

chrisgg wrote: »

Fidelity still levy a platform charge, and the fund is only available on their own platform.

I don't think Fidelity charge platform fees in the US, which is where that fund is available?
https://www.fidelity.com/why-fidelity/pricing-fees

We're some way off that pricing in the UK though.

pip895

IanManc wrote: »

VLS60 is not a tracker. It is a tied fund of funds, which follows a formula based on management decisions, such as to include UK FTSE stock in a proportion much higher than would be present in a tracker fund.

I know its not considered 100% passive but it is the single fund that most closely mirrors my portfolio - that also has home bias. Incidentally my predominantly passive Isa portfolio has less home bias than my Sipp so avoiding UK didn't help much...

msnau

This is really interesting thread.

I’m a complete novice investor. All the books I’ve read about investing (Tim Hale, Ramit Sethi etc) advise using passive trackers. So I’ve started investing in global, emerging, and property trackers.

I’d also like to invest a small proportion in active funds to try and beat the market. Maybe 30% in active.

How do you go about shortlisting, researching, and selecting active funds?

seacaitch

msnau wrote: »

How do you go about shortlisting, researching, and selecting active funds?

Here's some options to consider....


1. "Harder":

a) If passive investing via index trackers didn't exist, what might your investing strategy, or strategies, be?

- How would you decide what to buy?
- When would you buy?
- When would you sell?

And what would your reasoning be as to why you thought this method was going to make you money?

b) Having decided on your strategy(ies) you could implement it yourself directly or outsource the work to someone else, for a fee, by finding an actively managed fund whose methods aligned with your own.


2. "Easier":

a) Look at what has worked well either recently or for some time, and copy that by buying the same funds that are currently popular with as many other people as possible.

b) If what's been popular recently becomes unpopular because it stops working so well, return to step 2. a) and look again at what is now popular and buy that...


Have a think on that.

bostonerimus

msnau wrote: »

This is really interesting thread.

I’m a complete novice investor. All the books I’ve read about investing (Tim Hale, Ramit Sethi etc) advise using passive trackers. So I’ve started investing in global, emerging, and property trackers.

I’d also like to invest a small proportion in active funds to try and beat the market. Maybe 30% in active.

How do you go about shortlisting, researching, and selecting active funds?

There are always posts about active portfolios that have beaten the markets; some people do well. But the people that don't beat the market seldom post to advertise their failures.

If you want some ideas about active funds why not look at the OP's approach, after all it worked for them.

DrSyn

msnau wrote: »

This is really interesting thread.

I’m a complete novice investor. All the books I’ve read about investing (Tim Hale, Ramit Sethi etc) advise using passive trackers. So I’ve started investing in global, emerging, and property trackers.

I’d also like to invest a small proportion in active funds to try and beat the market. Maybe 30% in active.

How do you go about shortlisting, researching, and selecting active funds?

1. As you are a complete novice I suggest you first watch both of these:-

http://www.kroijer.com/

https://www.ifa.com/indexfundsthemovie/

2. Then consider investing in a low cost Global Multi Asset Fund. They have wide diversification while minimising risk, at low cost.

You chose the risk level or share/bond split you are comfortable with, pay them the money & they do the rest. Examples:-

https://www.vanguardinvestor.co.uk/investing-explained/what-are-lifestrategy-funds?intcmpgn=lifestrategyfunds_learnmore_link

With this you chose the share/bond split. They then will re-balance to maintain it at that split. You have to accept the market risk that goes with the split.

https://www.hsbc.co.uk/investments/isas/hsbc-global-strategy-portfolios/

With this you chose the risk level (say balanced) you are comfortable with. They the re-balance the funds assets to maintain it at that risk level. This is called a “Risk Targeted Fund”

3. If you still want to invest in an active fund you need to to work a lot harder and do research with no guarantee of a better result.

Try looking here:-

https://www.moneyobserver.com/what-are-money-observer-rated-funds

https://www2.trustnet.com/ratings/?univ=U

http://www.morningstar.co.uk/uk/tools/default.aspx


4. If you must use active funds, I suggest you make the low cost global asset fund the core of your portfolio and maybe use one or two active funds, to give it a tilt in a particular direction. This will make it easier to see what your portfolio is doing & to control its risk.

pip895

msnau wrote: »

How do you go about shortlisting, researching, and selecting active funds?

For my rather unscientific process I use a combination of Trustnet and HL for research -sometimes I will take weeks to decide to invest at other times its done in an hour.

I usually start by looking out funds in my chosen sector that are in the top quartile over the very short term say 3months. Trustnet is particularly useful here - I also knock out anything that is abnormally volatile (high FE Risk score) - or that has a poor long term track record.
I quite like funds for instance that have good long term records but that have had an underperforming period over say the last year but seem to have turned the corner.. Not very scientific I know but it has worked well on a number of occasions.:)

Next I start pulling up performance graphs and comparing them with trackers and other funds in my portfolio - tend to use HL for this. I will try to avoid funds that look too similar to others I have - for instance if I was looking for a UK All companies or UK equity income fund I would avoid one that tracked to closely with a UK small companies fund I already had.

Only at this stage do I start looking "under the bonnet" - looking at costs and pulling up the fund analysis on HL. (NB I do look at the KIID out of duty before investing but I rarely find anything in it that changes my mind:o)
The FE Crown ratings and the HL Wealth 50 accolade are considered as positives and might get used as a tie breaker but not much else.:)

bostonerimus

Nothing like that for me, I just hold Vanguard indexes to give me 70/30 split. I’m domestically biased and might rethink that at some point.

Whatever your approach to fund picking the question now comes back to where we started; how do you manage your portfolio and what do you trade if you think something is a loser.