Wealth Preservation vs Multi Asset Funds

Aminatidi

A_T wrote: »

CGT is essentially a play on index-linked treasuries with aggressive rebalancing when there is an stock market downturn (PNL/Troy Trojan is similar). It's an exceptional investment instrument and I never quite understand why it doesn't attract much interest from pension funds.

My understanding is it's related to size i.e. most pension funds and similar apparently insist on larger trusts.

Just to expand a little on the earlier graph here's an example of what staying out of trouble can do for you.

Alice_Holt

A recent article around this topic, and specifically the flexible investment IT sector:
https://www.itinvestor.co.uk/2019/11/flexible-friends/

tin586

Alice_Holt wrote: »

A recent article around this topic, and specifically the flexible investment IT sector:
https://www.itinvestor.co.uk/2019/11/flexible-friends/

Thanks. This is pertinent, which some cheerleaders for CGT don’t seem to appreciate:

“Capital Gearing, where Peter Spiller has run the show since 1982, is similar in many ways to Personal Assets. It has a better long-term record — returning 14% a year since 1982 versus 10% for the UK market — but a lot of that outperformance came in the 1980s...”

Aminatidi

tin586 wrote: »

Thanks. This is pertinent, which some cheerleaders for CGT don’t seem to appreciate:

“Capital Gearing, where Peter Spiller has run the show since 1982, is similar in many ways to Personal Assets. It has a better long-term record — returning 14% a year since 1982 versus 10% for the UK market — but a lot of that outperformance came in the 1980s...”

I suspect most of the cheerleaders appreciate it as it's documented very thoroughly and can be seen looking at the records.

I don't think anyone looks at CGT expecting 14% a year as that would be clearly nuts.

I think people look at CGT expecting not to get poor.

tin586

Its 10 year record is unimpressive compared to the index (usual caveat that past performance is not a guide to future performance, etc.)

Arsenal have not the Premier League since 2004. By stretching the analysis period back to 1989, one could make an argument about impressive ‘long term outperformance’, but Arsenal is not an obvious ‘buy’ today.

Aminatidi

tin586 wrote: »

Its 10 year record is unimpressive compared to the index (usual caveat that past performance is not a guide to future performance, etc.)

Arsenal have not the Premier League since 2004. By stretching the analysis period back to 1989, one could make an argument about impressive ‘long term outperformance’, but Arsenal is not an obvious ‘buy’ today.

Why would you compare it to an index?

Linton

tin586 wrote: »

Its 10 year record is unimpressive compared to the index (usual caveat that past performance is not a guide to future performance, etc.)

Arsenal have not the Premier League since 2004. By stretching the analysis period back to 1989, one could make an argument about impressive ‘long term outperformance’, but Arsenal is not an obvious ‘buy’ today.

If you have only been investing for 10 years or less, please, please dont think the returns you have been achieving are normal. They are unprecedented.

You dont get market beating or equalling performance in the good times without suffering severely in the bad times. This could mean a 50% fall in your wealth in a few months. CGT's primary objective is to prevent this happening. Doing so will lead to lower but in the case of CGT, far from negligible, returns during bull markets. In the long term, avoidance of losses can achieve as much or more than maximising gains.


To take your footballing analogy, would you be happy if your team spent all its money on attacking players and so could only afford a 3rd rate goalkeeper and defence?

A_T

To show how much poor old Peter Spiller has lost it since the 80s here's how his Capital Gearing Portfolio Fund (the open ended equivalent of CGT) has performed since 2001. From right to left:

Capital Gearing Portfolio Fund
Vanguard LifeStrategy Moderate Growth Fund (VSMGX)
Vanguard LifeStrategy Growth Fund (VASGX)
Vanguard LifeStrategy Income Fund (VASIX)
Berkshire Hathaway Inc. Class A (BRK.A)

So Warren Buffett has caught up with Spiller a couple of times but who knows what will happen in the next big downturn?

(open the image in a new tab to see clearly)

MarkCarnage

It's an exceptional investment instrument and I never quite understand why it doesn't attract much interest from pension funds.

Large DB pension funds (if these are what you mean) will asset allocate themselves, and will tend to buy and hold ILGs as they are the natural (indeed only) very close hedge for their liabilities. If they made a tactical or strategic move out of ILGs into equities, which might be very sensible for a private investor with very different objectives and constraints, then they start taking a big balance sheet risk for the sponsor, which the Trustees would generally be unwilling to do.

talexuser

Wow, hold the front page, a CAPITAL PRESERVATION fund has not done as well as another fund during a bull market, what a revelation!