Lindsell Train Global: what the hell is going on here?

Linton

ZingPowZing wrote: »

How can investing in a fund be termed ""DIY" ?
It may give the investor the illusion that he is "doing it himself" but in reality he has placed the decision-making into the hands of someone else.

Do you as a diy gardener breed all your plants from seed or do you choose them from a garden centre? Would you only accept someone as a diy gardener if they also bred their own plants? To take the analogy even further you could buy or breed random plants and put them in random places, but the results are likely to be very disappointing. Alternatively, with some skill or experience you could produce a design yourself and choose the right plant for the location. Alternatively you could hire a professional to specify the layout and plants to meet your requirements and you could perhaps also ask him/her to project manage the whole job, ongoing maintenance and any redesign should your requirements change.

Similarly with diy investing the key responsibility you are taking on is the design and the choice of the right components to make the design work. Whether you use funds or choose your own low level investments is a secondary detail. For most people the latter is far too much work to make it a practical proposition if you want the job done properly.

Rollinghome

ZingPowZing wrote: »

How can investing in a fund be termed ""DIY" ?
It may give the investor the illusion that he is "doing it himself" but in reality he has placed the decision-making into the hands of someone else.

If there are any investors are under the illusion you mention, that they will choose the investments the fund manager selects, then I've never spotted them. Most seem to understand the arrangement of duties reasonably well.

[Deleted User]

Linton wrote: »

if you want the job done properly.

Only if a fund outperforms the, maybe, 29 stocks of which it is compounded. Otherwise, what the investor is buying is protection, not performance.
Once you commit to a fund, the only decision over which you have control is when to sell, if you're lucky.

Prism

ZingPowZing wrote: »

Only if a fund outperforms the, maybe, 29 stocks of which it is compounded. Otherwise, what the investor is buying is protection, not performance.
Once you commit to a fund, the only decision over which you have control is when to sell, if you're lucky.

Whether or not it accurately describes the process of investing via funds, its the generally accepted term as opposed to using an IFA. I make a couple of actual decisions a year and its certainly feels like stretching the usage DIY as I'm not actually 'doing it' much at all. However I do put a fair amount of effort into fund selection as Bowlhead describes earlier. I monitor funds for many months before making a decision and try and understand the business (at least lightly) of a majority of their individual holdings. However financials are not my thing and so I would rather leave buying decisions to the fund managers.

bowlhead99

ZingPowZing wrote: »

How can investing in a fund be termed ""DIY" ?
It may give the investor the illusion that he is "doing it himself" but in reality he has placed the decision-making into the hands of someone else.

As I qualified the introduction to the post:

"If you're going to buy investment funds to grow your money, you have two basic choices

- pay a professional to guide you [on which funds to use to construct the portfolio]

- do it yourself [research and select the funds yourself]

We know you don't consider anyone using any manner of collective investment scheme within their portfolio to be 'doing it themself' because it would involve paying someone for help.

However, I had a steak earlier which I seasoned and cooked myself by placing it somewhere hot. I didn't raise the cow from a calf, then kill and butcher it, nor pan for sea salt in an estuary, nor smelt my own iron to make the pan while drilling for the gas to pipe to my home.

Instead, someone else provided the resources for my labours and made them conveniently available in my town. It was quite efficient to get the benefits of someone else doing things such as raising and butchering cattle, reaping the pepper fields and salty inlets to package up some seasoning, constructing a factory to make kitchen tools, drilling and piping gas to my town through common infrastructure to a collective of townspeople keen to receive utilities and grocery supplies, sharing the overall cost of the endeavours.

When I turn a raw bit of meat into a nicely-cooked steak, using my own equipment and culinary know-how, I feel I have 'done it myself', as I took responsibility for the sourcing, cooking and washing up. I am still at the mercy of the butcher when it comes to the cut and quality of the meat if I don't do my due diligence, likewise the reliability of the cooker or gas supply may prove an optimistic assumption, so I will need to take responsibility for what I 'outsource'.

Still, it is not the full-service outsourcing I would get by popping down to Wetherspoons Steak Club where their staff do the procurement, storage, cooking, serving and clean-up. My cooking, as an amateur, is a form of Do It Yourself.

Aminatidi

aroominyork wrote: »

One consideration is whether to hedge some of your foreign currency exposure. The consensus on this forum seems to be against hedging because i) you pay higher fees for the privilege, and ii) exchange rate revert to the mean, so what you gain or lose in the short term will reverse as time goes on. Many people see hedging your funds as gambling – the contrary view is that if you want your investments to reflect market movements, unhedged funds add a gamble by playing the currency markets.

Many pension funds hedge part of their equity exposures and I think there’s a good case for that, whether or not you have short-term concerns about the unpredictability that Brexit is causing for Sterling. You can hunt out investments that don’t add to the cost, eg while IGWD hedged global index is expensive at 0.55% OCF, XDPG hedged S&P500 is only 0.09% OCF.

I'm tending to go for investment trusts at the moment, rightly or wrongly I guess, but they don't have hedging as an option

[Deleted User]

A couple of diverting comparisons on this thread.

If only the average FA or fund-manager was Capability Brown rather than
https://www.youtube.com/watch?v=h-z5T8meC84

I like the honesty of Prism's response: financials are not his thing, so he invests in funds.

After a good year on the stock markets, some on the forum are congratulating themselves for choosing a good performing fund. 1.01 the same cohort will blame their fund-managers in a downturn.
And that 85% explains the attraction of funds.

quirkydeptless

bowlhead99 wrote: »

However, I had a steak earlier which I seasoned and cooked myself by placing it somewhere hot.

I like to DIY my steak too. I selected a portfolio of top chefs and restaurants that I chose myself from reading reviews, menus, and talking to users of forums like Munchy Steaking Expert. I saved money with my DIY streak by not paying for an expensive gourmet to advise me, and I like a 60/40 meat/veg ration

Rollinghome

ZingPowZing wrote: »

Only if a fund outperforms the, maybe, 29 stocks of which it is compounded. Otherwise, what the investor is buying is protection, not performance.
Once you commit to a fund, the only decision over which you have control is when to sell, if you're lucky.

Would you care to say how old you are and how long you've been investing? I'd guess you're quite young as you still seem to believe that machismo is of importance to investing. It isn't, and too much can cause expensive mistakes: which is perhaps why wives are often better investors than their husbands,

When I started investing nearly 50 years ago, I invested only in individual stocks (though for for international exposure I mostly used ITs). One reason for that was that unit trusts had huge front-end fees, there were no platforms to buy from, and there was no internet for research.

I put a huge amount of time and effort into buying and trading stocks and did fairly well I thought compared to available unit trusts. I didn't own a fund, and then only in a small way, until the first cheap UK index trackers arrived in the 90s, first Gartmore and then L&G I think, the latter charging 'just' 0.75% and no initial fee.

There came a time when I became very busy and was struggling to find the time for investing when I noticed that, for all my effort, after typical 1.5% broking fees, stamp duty, and spreads, I wasn't doing much better than the cheap L&G tracker. It occurred to me that the hourly rate I was earning for all that hassle was tiny compared to my day job even with quite big trades. So I gradually moved to mostly ITs and trackers with a few managed funds if I thought them useful (though I still have around 10% in individual stocks).

Now I can't believe my luck: all our luck. Trackers at less than 0.1%, stockbroking at just a fiver, platforms and ISAs without any account fees like Iweb, and a huge amount of information on the net. Investing has never been so easy or so cheap, which is no doubt why the activity of a few is now that of so many. Without collective investments far fewer would be seriously investing.

So after trying the alternatives for many years, I'm entirely pragmatic. I invest in whatever I expect to give the best returns with the least effort, including UTs/oeics if they do the job. Dogma doesn't make me rich and seeing virtue in doing things the hard way is a very Victorian concept.

I suspect you might eventually come to a similar conclusion - which would explain your interest in funds despite advocating using only individual stocks. Whatever you choose, I hope it works well for you.

Aminatidi

Rollinghome wrote: »

Would you care to say how old you are and how long you've been investing?

Personally I've only been doing this for around 2 years.

It staggers and intrigues me how good I think we have it now compared to how someone who seems to have been doing this for a long time would have had it.

Instant trading? Fees under 1% per annum all-in.

Those seem like things that presumably people could only have dreamed of 50 years ago?

And I daresay in years to come that people will query when people got "ripped off" by those expensive passive funds