Wealth Preservation vs Multi Asset Funds

coastline

Linton wrote: »

If you want to see an impressive example of the value of Wealth Preservation funds look at Capital Gearing Trust's record over the past 20 years. During that time it has fairly steadily increased in value with a return of 400%. There is no sign of either the .com boom/bust nor the 2008/2009 crashes.


The FTSE World Index with dividends reinvested is showing a return of 250%. Is anyone claiming that VLS40 would have done as well as the world index? I have been looking as other funds which have been around for 20 years. So far, the only one that equals CGT's record is Fidelity Special Situations, though this fund is very much more volatile. None of the funds in the same sector as VLS40 have come anywhere close.



If you want to explore try Trustnet/Tools/Charting.

https://www2.trustnet.com/Tools/Charting.aspx?typeCode=NM990100,FI0EY

There's a Threadneedle UK fund but I can't find it ?

Regarding VLS 40 and other similar funds I think the VLS fund won't be too far away. There's been a few corrections even in the last 5 years and the most recent one in late 2018-early 2019 of nearly 20%. If active funds were really that sharp you would think they would take advantage of such a correction . In the case of PAT its performance since then is pretty similar to VLS40. Everyone's got different ideas I suppose.

https://www2.trustnet.com/Tools/Charting.aspx?typeCode=NM990100,FACDO,FACDQ,FITPNL

talexuser

JohnWinder wrote: »

they’re language skills are questionable

really...?

JohnWinder

oops; I'll speak to my keyboard.

Linton

JohnWinder wrote: »

Linton, have you put up two straw men in two posts, requiring them be knocked down.
Frstly, I can’t see anyone has even hinted that VLS40 would have done as well as a global equity index; and I didn’t intend to claim index trackers are optimal for everyone in all circumstances, although come to think of it……..

My point was we do not know how VLS40 would have performed 20 years ago. However we do know that CGT greatly outperformed a world index and therefore would presumably have greatly outperformed VLS40 over the long term.

But I do think it’s a bit more of a gamble to be a stock picker than an index tracker, and think it’s only fair to point that out so folk know what they’re up against, and to have the idea knocked down if it’s erroneous. Go for it.

A strawman, I would agree that pure stock picking from the full universe of shares n the market isprobably doomed to failure. There are other approaches to investing than tracking indexes or picking individual shares from a choice of many thousands. For me the key to investing is asset allocation. I see no reason why the allocations of a cap weighted global index should be optimal either for performance or for risk management.

We can’t possibly know what the objectives of the average investors are unless most express them as ‘track some indices’.

Do people really write their financial objectives like that?
I imagined they’d write: have enough assets by 2040 to retire on a king’s ransom; or, have enough low volatility assets to afford tertiary education for six years in 2028. The strategy might be to invest in global equities, or buy index linked gilts, or whatever, but they’re not an objective. The fund managers have objectives like ‘match the index’ or ‘beat it by 2%/year’.

And you likely think that too, because you’ve written ‘what matters is achieving your objectives at an acceptable risk’. If your objective was ‘tracking the index’, there’d be almost no risk, because Blackrock, Fidelity, Vangard et al reliably pull it off every year.

The average investor isnt a private individual putting away £5K/year into a pension to be taken in 30 years time. If anything its a large financial institution probably looking for gains in the short to medium term.


I dont think your example objectives are very useful. I am thinking of something more specific such as retiring in 30 years time with an income of £25K at present values or using a £500K pension pot to generate a steady income of £20K inflation linked for the next 25 years. Or having the £100K needed for 6 years tertiary education in 2028.


If you dont have a specific aim your success is either trivial such as in your objective to match an index whatever it may happen to do or impossible to achieve such as making maximum returns.

firestone

as somebody with CGT for a few years its an interesting thread.For what its worth i have started to look at HSBC Global Strategy Cautious portfolio (rather then VLS 20/40) as a cheaper consideration but still with an active edge

JohnWinder

Linton, old mate, you’re a hard marker.

Thrugelmir

coastline wrote: »

If active funds were really that sharp you would think they would take advantage of such a correction .

By doing what?

coastline

Thrugelmir wrote: »

By doing what?

Changing the mix. If the market was down 20% in the period quoted late 2018-early 2019 why not buy more equities.? Flexible funds have this mix of bonds and equities. Usually periods of such a correction present buying opportunities. In the case quoted the path of VLS and PAT are pretty similar looking at the chart.

Thrugelmir

coastline wrote: »

Changing the mix. If the market was down 20% in the period quoted late 2018-early 2019 why not buy more equities.? Flexible funds have this mix of bonds and equities. Usually periods of such a correction present buying opportunities. In the case quoted the path of VLS and PAT are pretty similar looking at the chart.

Equities are not down 20% per se. Markets reflect the net of +'s and -'s of a basket of individual stocks. Many to seem to view markets as mechanical roller coasters these days. With a disconnect to what they are actually investing in and why. Buying a stock whether it be after a correction or at the top of the market should have a rationale behind it. (I would add that the global majors are highly researched and therefore priced more efficiently).

JohnWinder

I find it a challenge to decide if I’d prefer HSBC Global Strategy Cautious fund or a VLS. How do you evaluate a fund like HSBC’s, sensibly? I’m looking at you, Lint.
It mostly uses index trackers; so far so good.
Are its indices any good? One of them is a Russell1000 I think; Tim Hale in the first edition of his book didn’t favour one of the Russell indices if I remember correctly.
It mostly uses HSBC’s own indices; that saves paying SP or MSCI to use one of their indices, but how have the comparable HSBC indices performed?
It uses an ishares ETF; would you be paying the ishares ETF management fee and then the HSBC fund’s fee on top?
It buys government funds bonds directly rather than via a fund; that saves on a licence fee to use someone’s index, and returns are perhaps similar. But it’s less transparent than an index regarding how they choose their buys and sells.
Index funds are accountable: did they track the index closely - if so you get just what you paid for (market returns). Are the active elements of HSBC’s fund accountable, against what standard?