Vanguard Factor Funds

Linton

AnotherJoe wrote: »

Both of them have something that's incredibly difficult to surmount which is huge scale.
There are better or equally as good OS's and office packages which are free, yet MS thrives, and Facebook a huge embedded base of users with all their data sunk in it that through sheer inertia would require something remarkable to overturn it.

MS is really a supplier to business. I suspect the software we as home users are familar with is a loss-leader. Business generally cannot risk being dependent on free software with the risk of lack of support or flakey upgrade paths. Of the tech companies I would consider MS the best candidate for fundsmith.


Facebook is different. It is essentially a seller of advertising space. As such it is easily replaceable. It is also at serious political risk.

bostonerimus

Linton wrote: »

Given my post on Asset Allocation and Diversification it should be clear that I do not see investing in active funds as a gamble. On the contrary - just using passive funds makes detailed asset allocation very difficult if not impossible. You are committed to following the market. If the market chooses to go off into never-never land such as happened in the .com boom/bust around 20 years ago you have no choice but to go with it. If some sectors are not amenable to passive investing, such as small companies, you simply cant invest in them.


However for the inexperienced investor with limited amounts of money to invest I would say that the best strategy is to invest in a single multi-asset fund of appropriate risk and dont worry about the asset allocation. Let the fund manager make the decisions. It dioesnt really matter whether the multi-asset fund is active or passive or some sort of mixture.

I agree with Linton that the beginning investor and anyone with small amounts to invest should stick to multi-asset funds.

The essence of active investing is "factor investing"....or should be. The factor might be "value", "size", "momentum" etc. So if you overweight small cap stocks you are doing so because you believe that more small cap in your portfolio will give you greater risk adjusted returns. The really dangerous sort of active investing strays into stock picking where the fund focusses on a few stocks (maybe bought with some factors in mind) and abandons the fuzzy statistical blanket of the whole market and before you know it you are day trading individual stocks based on the second derivative of some price curve.

[Deleted User]

AnotherJoe wrote: »

Both of them have something that's incredibly difficult to surmount which is huge scale.
There are better or equally as good OS's and office packages which are free, yet MS thrives, and Facebook a huge embedded base of users with all their data sunk in it that through sheer inertia would require something remarkable to overturn it.

Adding to your post MS's growth in the future is Azure (I have posted about this on another post) - there is still some way to go in cloud adoption and MS has one of the nicest stacks to migrate to from an application perspective
Free software for businesses is always going to be a no no at the corporate level. Procurement need somebody to sign an order with and we all need somebody to sue
Even the clever stuff which is open source at the moment tends to have a reseller who adds on maintenance charges (Cloudera/HWX for Hadoop, Confluent for Kafka etc)

DrSyn

msnau wrote: »

For the inexperienced investor (me), best to keep active funds to a minimum - maybe a small gambling pot I am comfortable losing in worst case scenario.

One approach you might consider would be to have a low cost global muti asset fund as the major core of your portfolio. Then have an active fund (say smaller companies) to give the portfolio a tilt in a particular direction, that could be your "small gambling pot".

londoninvestor

Linton wrote: »

I suspect the software we as home users are familar with is a loss-leader.

Yes - as illustrated by the blindish eye that MS turn to home piracy:

https://www.techradar.com/uk/news/why-microsoft-could-be-dropping-the-ball-on-software-piracy

TechRadar wrote:

Microsoft’s attitude to piracy can therefore be interpreted as a tacit acknowledgement of its usefulness as a marketing tool. Cracking too hard on it could be bad publicity and Microsoft could always start turning the screws should Windows or Office revenues start to dwindle.

Prism

Linton wrote: »

MS is really a supplier to business. I suspect the software we as home users are familar with is a loss-leader. Business generally cannot risk being dependent on free software with the risk of lack of support or flakey upgrade paths. Of the tech companies I would consider MS the best candidate for fundsmith..

Ageed. Microsoft is very quickly turning from a company that sells software to one that sells no software at all, but instead provides services to access its software in the cloud, or a platform to develop your own. The consumer stuff (Windows and Office) will probably last a while but business software (except for Office) is all but done with Windows fast becoming a thing of the past.

[Deleted User]

To the OP another article to look at page 36 of this months MI magazine https://masterinvestor.co.uk/wp-content/uploads/2019/10/Master-Investor-Magazine-Issue-55.pdf

To those looking at cloud computing - keep an eye on this new ETF WCLD (tracking NASDAQ:EMCLOUD)

msnau

Deleted_User wrote: »

To the OP another article to look at page 36 of this months MI magazine

To those looking at cloud computing - keep an eye on this new ETF WCLD (tracking NASDAQ:EMCLOUD)

Many thanks - I read it with much interest. The graph on page 41 was most interesting: the Momentum fund was way ahead of the under factor funds.

barnstar2077

DrSyn wrote: »

One approach you might consider would be to have a low cost global muti asset fund as the major core of your portfolio. Then have an active fund (say smaller companies) to give the portfolio a tilt in a particular direction, that could be your "small gambling pot".

I have done something similar, with 10% of my pot in other hand picked funds which I can play with. I have to keep telling myself not to get too greedy. The global multi asset funds were my original plan and I am trying not to deviate from that too much. Investing to plan is boring though so I am always tempted to spice things up a bit. So far I am managing to rein myself in! :rotfl: