IFA or DIY - any thoughts appreciated

Linton

zagfles said:

Linton said:

zagfles said:

Linton said:

BritishInvestor said:

enthusiasticsaver said:

Just looking at the charges is a bit like comparing apples and pears and having invested with VLS60 for about 6 years I moved to an IFA last year and was under no illusion that the charges would be higher.  The performance of the VLS60 though over the last 12 months is 4.4% whereas the portfolio under my IFA has returned  almost 10% with a similar asset allocation of 60% equities and 40% fixed term.  A few of the funds he chose have performed very well over the last few months though so that has skewed the results.  The charges are higher but the return is too so overall it has performed better than in a passive multi asset fund.  I am only speaking from a personal point of view though and of course you could get investors with other IFAs producing completely different results. You cannot really only look at charges in isolation. 

An IFA (or anyone else for that matter) is unlikely to significantly outperform something like the LS range (or similar multi-asset low cost offerings) over the long term. 

Out-performing the Vanguard LS range is easy - the FTSE World index has outperformed VLS100 every year for the past 5 years.

Well it would do wouldn't it? Index trackers will always underperform the index they're tracking since they have charges.

Fidelity Index World class A has outperformed VLS100 every year for the past 5 years.  
Fidelity Index World Class A charges: 0.3%, 5 year performance: 89%
VLS100 charges: 0.22%, 5 year performance: 69%

So theBritishInvestor said:

Linton said:

zagfles said:

Linton said:

BritishInvestor said:

enthusiasticsaver said:

Just looking at the charges is a bit like comparing apples and pears and having invested with VLS60 for about 6 years I moved to an IFA last year and was under no illusion that the charges would be higher.  The performance of the VLS60 though over the last 12 months is 4.4% whereas the portfolio under my IFA has returned  almost 10% with a similar asset allocation of 60% equities and 40% fixed term.  A few of the funds he chose have performed very well over the last few months though so that has skewed the results.  The charges are higher but the return is too so overall it has performed better than in a passive multi asset fund.  I am only speaking from a personal point of view though and of course you could get investors with other IFAs producing completely different results. You cannot really only look at charges in isolation. 

An IFA (or anyone else for that matter) is unlikely to significantly outperform something like the LS range (or similar multi-asset low cost offerings) over the long term. 

Out-performing the Vanguard LS range is easy - the FTSE World index has outperformed VLS100 every year for the past 5 years.

Well it would do wouldn't it? Index trackers will always underperform the index they're tracking since they have charges.

Fidelity Index World class A has outperformed VLS100 every year for the past 5 years.  
Fidelity Index World Class A charges: 0.3%, 5 year performance: 89%
VLS100 charges: 0.22%, 5 year performance: 69%

MSCI World is DM only.

y're tracking different "indexes". Quick glance shows the Fidelity one thinks the "world" is 61% USA, whereas VLS only thinks 44% of the world is USA. USA seems to have done better than the rest of the world.

ETA also VLS is 22% UK, whereas Fidelity is only 4% UK.

So basically, USA stocks (and currency) did better than UK over the last 5 years.

Which nicely demonstrates my point that the primary difference between funds is asset allocation.  The danger I see with the VLS series is that the naive investors who would naturally default to a world tracker, especially after a little time on this forum, are being told that passive is always better than active, with VLS being the most frequently quoted option.  They are unlikely to appreciate such details may be far more important.  The right active is better than the wrong passive, and the right passive may well not exist.

Linton

BritishInvestor said:

Linton said:

BritishInvestor said:

garmeg said:

BritishInvestor said:

enthusiasticsaver said:

Just looking at the charges is a bit like comparing apples and pears and having invested with VLS60 for about 6 years I moved to an IFA last year and was under no illusion that the charges would be higher.  The performance of the VLS60 though over the last 12 months is 4.4% whereas the portfolio under my IFA has returned  almost 10% with a similar asset allocation of 60% equities and 40% fixed term.  A few of the funds he chose have performed very well over the last few months though so that has skewed the results.  The charges are higher but the return is too so overall it has performed better than in a passive multi asset fund.  I am only speaking from a personal point of view though and of course you could get investors with other IFAs producing completely different results. You cannot really only look at charges in isolation. 

An IFA (or anyone else for that matter) is unlikely to significantly outperform something like the LS range (or similar multi-asset low cost offerings) over the long term. 

Depends on the funds chosen.

Terry Smith has significantly outperformed for years.

As did Neil Woodford, until he didn't.

1. You sure Fundsmith has outperformed if benchmarked appropriately?
Ditto Woodford
https://finalytiq.co.uk/woodford-vs-ftse-uk-equity-income-lets-set-the-record-straight/
You have to remember the (active) investment management industry makes money from selling the dream of outperformance.

2. If anyone has the ability to pick these future "outperforming" funds/sectors I'm all ears.

This has just been released and is a good read
https://www.amazon.co.uk/Incredible-Shrinking-Alpha-2nd-successful-ebook/dp/B08BX5HRLJ/ref=sr_1_1?

1)  What is your passive alternative to Fundsmith?  Can you actually invest in your "appropriate benchmark"?
2) Woodford's glory days were in the 1990s and early 2000s which are not covered in your link.  His tortoise vs hare strategy was based on solid highly profitable income generating companies and was extraordinarily successful before large scale tech driven growth took over as a primary driver of the markets.  He was one of the few managers with the authority to stick to his approach during the .com boom/crash. 

1. Most investors taking a factor-based investing approach (which I'd categorise as different from passive, and one that you'd need to use to attempt to emulate Fundsmith) tend to invest in a diametrically opposite fashion - small-cap value (see Dimensional etc). I'm sure there are reasonable approximations but it's just not a common investing "style" that I come across very often.
2. This link goes back to the late 90s. 
https://finalytiq.co.uk/woodford-vs-ftse-uk-equity-income-lets-set-the-record-straight/

1) You can get broad factor based ETFs but passive funds find it difficult to keep out the no-hopers.  This is a particular problem with income funds.  People can do the job much more effectively. But I would not see Fundsmith as particularly factor based, at least in terms of the standard factors, as it contains only 29 companies spread almost entirely over just 3 disparate sectors, including consumer staples and techs.  Some other managers appear to have a similar approach though rather less extreme - Lindsall Train and Baillie Gifford for example.
2) The only reference to pre .com crash years is the comparison with the UK FTSE Equity Income TR Index, perhaps not one of the most well known ones.  Woodford chose to invest single-mindedly in that area despite pressures to do otherwise.  There was (and AFAIK still is) no UK FTSE Equity Income TR tracker.  IUKD, I believe the only UK Income tracker around at that time, was a catastrophe in the Great Crash from which it has barely recovered for the reason given in (1).

zagfles

Linton said:

zagfles said:

Linton said:

zagfles said:

Linton said:

BritishInvestor said:

enthusiasticsaver said:

Just looking at the charges is a bit like comparing apples and pears and having invested with VLS60 for about 6 years I moved to an IFA last year and was under no illusion that the charges would be higher.  The performance of the VLS60 though over the last 12 months is 4.4% whereas the portfolio under my IFA has returned  almost 10% with a similar asset allocation of 60% equities and 40% fixed term.  A few of the funds he chose have performed very well over the last few months though so that has skewed the results.  The charges are higher but the return is too so overall it has performed better than in a passive multi asset fund.  I am only speaking from a personal point of view though and of course you could get investors with other IFAs producing completely different results. You cannot really only look at charges in isolation. 

An IFA (or anyone else for that matter) is unlikely to significantly outperform something like the LS range (or similar multi-asset low cost offerings) over the long term. 

Out-performing the Vanguard LS range is easy - the FTSE World index has outperformed VLS100 every year for the past 5 years.

Well it would do wouldn't it? Index trackers will always underperform the index they're tracking since they have charges.

Fidelity Index World class A has outperformed VLS100 every year for the past 5 years.  
Fidelity Index World Class A charges: 0.3%, 5 year performance: 89%
VLS100 charges: 0.22%, 5 year performance: 69%

So theBritishInvestor said:

Linton said:

zagfles said:

Linton said:

BritishInvestor said:

enthusiasticsaver said:

Just looking at the charges is a bit like comparing apples and pears and having invested with VLS60 for about 6 years I moved to an IFA last year and was under no illusion that the charges would be higher.  The performance of the VLS60 though over the last 12 months is 4.4% whereas the portfolio under my IFA has returned  almost 10% with a similar asset allocation of 60% equities and 40% fixed term.  A few of the funds he chose have performed very well over the last few months though so that has skewed the results.  The charges are higher but the return is too so overall it has performed better than in a passive multi asset fund.  I am only speaking from a personal point of view though and of course you could get investors with other IFAs producing completely different results. You cannot really only look at charges in isolation. 

An IFA (or anyone else for that matter) is unlikely to significantly outperform something like the LS range (or similar multi-asset low cost offerings) over the long term. 

Out-performing the Vanguard LS range is easy - the FTSE World index has outperformed VLS100 every year for the past 5 years.

Well it would do wouldn't it? Index trackers will always underperform the index they're tracking since they have charges.

Fidelity Index World class A has outperformed VLS100 every year for the past 5 years.  
Fidelity Index World Class A charges: 0.3%, 5 year performance: 89%
VLS100 charges: 0.22%, 5 year performance: 69%

MSCI World is DM only.

y're tracking different "indexes". Quick glance shows the Fidelity one thinks the "world" is 61% USA, whereas VLS only thinks 44% of the world is USA. USA seems to have done better than the rest of the world.

ETA also VLS is 22% UK, whereas Fidelity is only 4% UK.

So basically, USA stocks (and currency) did better than UK over the last 5 years.

Which nicely demonstrates my point that the primary difference between funds is asset allocation.  The danger I see with the VLS series is that the naive investors who would naturally default to a world tracker, especially after a little time on this forum, are being told that passive is always better than active, with VLS being the most frequently quoted option.  They are unlikely to appreciate such details may be far more important.  The right active is better than the wrong passive, and the right passive may well not exist.

Well exactly - and equally they might think that a better performing fund is intrinsically better rather than just happening to have a different asset allocation which turned out to be more favourable. Looking at the distribution of the two funds mentioned, I'd be opting for the VLS one as I think 61% USA is too much, plus a bias towards UK is more suitable as it lessens currency risk (eg if the pound strengthens all foreign investments will fall in GBP terms). I wouldn't just go for the best performer over the last 5 years.

[Deleted User]

zagfles said:

Linton said:

zagfles said:

Linton said:

zagfles said:

Linton said:

BritishInvestor said:

enthusiasticsaver said:

Just looking at the charges is a bit like comparing apples and pears and having invested with VLS60 for about 6 years I moved to an IFA last year and was under no illusion that the charges would be higher.  The performance of the VLS60 though over the last 12 months is 4.4% whereas the portfolio under my IFA has returned  almost 10% with a similar asset allocation of 60% equities and 40% fixed term.  A few of the funds he chose have performed very well over the last few months though so that has skewed the results.  The charges are higher but the return is too so overall it has performed better than in a passive multi asset fund.  I am only speaking from a personal point of view though and of course you could get investors with other IFAs producing completely different results. You cannot really only look at charges in isolation. 

An IFA (or anyone else for that matter) is unlikely to significantly outperform something like the LS range (or similar multi-asset low cost offerings) over the long term. 

Out-performing the Vanguard LS range is easy - the FTSE World index has outperformed VLS100 every year for the past 5 years.

Well it would do wouldn't it? Index trackers will always underperform the index they're tracking since they have charges.

Fidelity Index World class A has outperformed VLS100 every year for the past 5 years.  
Fidelity Index World Class A charges: 0.3%, 5 year performance: 89%
VLS100 charges: 0.22%, 5 year performance: 69%

So theBritishInvestor said:

Linton said:

zagfles said:

Linton said:

BritishInvestor said:

enthusiasticsaver said:

Just looking at the charges is a bit like comparing apples and pears and having invested with VLS60 for about 6 years I moved to an IFA last year and was under no illusion that the charges would be higher.  The performance of the VLS60 though over the last 12 months is 4.4% whereas the portfolio under my IFA has returned  almost 10% with a similar asset allocation of 60% equities and 40% fixed term.  A few of the funds he chose have performed very well over the last few months though so that has skewed the results.  The charges are higher but the return is too so overall it has performed better than in a passive multi asset fund.  I am only speaking from a personal point of view though and of course you could get investors with other IFAs producing completely different results. You cannot really only look at charges in isolation. 

An IFA (or anyone else for that matter) is unlikely to significantly outperform something like the LS range (or similar multi-asset low cost offerings) over the long term. 

Out-performing the Vanguard LS range is easy - the FTSE World index has outperformed VLS100 every year for the past 5 years.

Well it would do wouldn't it? Index trackers will always underperform the index they're tracking since they have charges.

Fidelity Index World class A has outperformed VLS100 every year for the past 5 years.  
Fidelity Index World Class A charges: 0.3%, 5 year performance: 89%
VLS100 charges: 0.22%, 5 year performance: 69%

MSCI World is DM only.

y're tracking different "indexes". Quick glance shows the Fidelity one thinks the "world" is 61% USA, whereas VLS only thinks 44% of the world is USA. USA seems to have done better than the rest of the world.

ETA also VLS is 22% UK, whereas Fidelity is only 4% UK.

So basically, USA stocks (and currency) did better than UK over the last 5 years.

Which nicely demonstrates my point that the primary difference between funds is asset allocation.  The danger I see with the VLS series is that the naive investors who would naturally default to a world tracker, especially after a little time on this forum, are being told that passive is always better than active, with VLS being the most frequently quoted option.  They are unlikely to appreciate such details may be far more important.  The right active is better than the wrong passive, and the right passive may well not exist.

Well exactly - and equally they might think that a better performing fund is intrinsically better rather than just happening to have a different asset allocation which turned out to be more favourable. Looking at the distribution of the two funds mentioned, I'd be opting for the VLS one as I think 61% USA is too much, plus a bias towards UK is more suitable as it lessens currency risk (eg if the pound strengthens all foreign investments will fall in GBP terms). I wouldn't just go for the best performer over the last 5 years.

Disagree. I think $1.33 is a good entry rate to the kind of US stocks you cannot buy under another flag. And considering readers' houses, salaries, savings and pensions are valued in £, a bias towards UK investment means doubling-down on an inherent home bias. The advantage would be that won't feel poorer than your neighbour; if it doesn't bother you that you will probably be poorer in the world, then that's fine. I agree with not just going with the best performer over 5 years, but £ has been depreciating for a century.

Thrugelmir

ZingPowZing said:

zagfles said:

Linton said:

zagfles said:

Linton said:

zagfles said:

Linton said:

BritishInvestor said:

enthusiasticsaver said:

Just looking at the charges is a bit like comparing apples and pears and having invested with VLS60 for about 6 years I moved to an IFA last year and was under no illusion that the charges would be higher.  The performance of the VLS60 though over the last 12 months is 4.4% whereas the portfolio under my IFA has returned  almost 10% with a similar asset allocation of 60% equities and 40% fixed term.  A few of the funds he chose have performed very well over the last few months though so that has skewed the results.  The charges are higher but the return is too so overall it has performed better than in a passive multi asset fund.  I am only speaking from a personal point of view though and of course you could get investors with other IFAs producing completely different results. You cannot really only look at charges in isolation. 

An IFA (or anyone else for that matter) is unlikely to significantly outperform something like the LS range (or similar multi-asset low cost offerings) over the long term. 

Out-performing the Vanguard LS range is easy - the FTSE World index has outperformed VLS100 every year for the past 5 years.

Well it would do wouldn't it? Index trackers will always underperform the index they're tracking since they have charges.

Fidelity Index World class A has outperformed VLS100 every year for the past 5 years.  
Fidelity Index World Class A charges: 0.3%, 5 year performance: 89%
VLS100 charges: 0.22%, 5 year performance: 69%

So theBritishInvestor said:

Linton said:

zagfles said:

Linton said:

BritishInvestor said:

enthusiasticsaver said:

Just looking at the charges is a bit like comparing apples and pears and having invested with VLS60 for about 6 years I moved to an IFA last year and was under no illusion that the charges would be higher.  The performance of the VLS60 though over the last 12 months is 4.4% whereas the portfolio under my IFA has returned  almost 10% with a similar asset allocation of 60% equities and 40% fixed term.  A few of the funds he chose have performed very well over the last few months though so that has skewed the results.  The charges are higher but the return is too so overall it has performed better than in a passive multi asset fund.  I am only speaking from a personal point of view though and of course you could get investors with other IFAs producing completely different results. You cannot really only look at charges in isolation. 

An IFA (or anyone else for that matter) is unlikely to significantly outperform something like the LS range (or similar multi-asset low cost offerings) over the long term. 

Out-performing the Vanguard LS range is easy - the FTSE World index has outperformed VLS100 every year for the past 5 years.

Well it would do wouldn't it? Index trackers will always underperform the index they're tracking since they have charges.

Fidelity Index World class A has outperformed VLS100 every year for the past 5 years.  
Fidelity Index World Class A charges: 0.3%, 5 year performance: 89%
VLS100 charges: 0.22%, 5 year performance: 69%

MSCI World is DM only.

y're tracking different "indexes". Quick glance shows the Fidelity one thinks the "world" is 61% USA, whereas VLS only thinks 44% of the world is USA. USA seems to have done better than the rest of the world.

ETA also VLS is 22% UK, whereas Fidelity is only 4% UK.

So basically, USA stocks (and currency) did better than UK over the last 5 years.

Which nicely demonstrates my point that the primary difference between funds is asset allocation.  The danger I see with the VLS series is that the naive investors who would naturally default to a world tracker, especially after a little time on this forum, are being told that passive is always better than active, with VLS being the most frequently quoted option.  They are unlikely to appreciate such details may be far more important.  The right active is better than the wrong passive, and the right passive may well not exist.

Well exactly - and equally they might think that a better performing fund is intrinsically better rather than just happening to have a different asset allocation which turned out to be more favourable. Looking at the distribution of the two funds mentioned, I'd be opting for the VLS one as I think 61% USA is too much, plus a bias towards UK is more suitable as it lessens currency risk (eg if the pound strengthens all foreign investments will fall in GBP terms). I wouldn't just go for the best performer over the last 5 years.

but £ has been depreciating for a century.

Perhaps the $ has had it's day...........
Pound was trading against the $ at 1.08 in 1985. 

[Deleted User]

Thrugelmir said:

ZingPowZing said:

zagfles said:

Linton said:

zagfles said:

Linton said:

zagfles said:

Linton said:

BritishInvestor said:

enthusiasticsaver said:

Just looking at the charges is a bit like comparing apples and pears and having invested with VLS60 for about 6 years I moved to an IFA last year and was under no illusion that the charges would be higher.  The performance of the VLS60 though over the last 12 months is 4.4% whereas the portfolio under my IFA has returned  almost 10% with a similar asset allocation of 60% equities and 40% fixed term.  A few of the funds he chose have performed very well over the last few months though so that has skewed the results.  The charges are higher but the return is too so overall it has performed better than in a passive multi asset fund.  I am only speaking from a personal point of view though and of course you could get investors with other IFAs producing completely different results. You cannot really only look at charges in isolation. 

An IFA (or anyone else for that matter) is unlikely to significantly outperform something like the LS range (or similar multi-asset low cost offerings) over the long term. 

Out-performing the Vanguard LS range is easy - the FTSE World index has outperformed VLS100 every year for the past 5 years.

Well it would do wouldn't it? Index trackers will always underperform the index they're tracking since they have charges.

Fidelity Index World class A has outperformed VLS100 every year for the past 5 years.  
Fidelity Index World Class A charges: 0.3%, 5 year performance: 89%
VLS100 charges: 0.22%, 5 year performance: 69%

So theBritishInvestor said:

Linton said:

zagfles said:

Linton said:

BritishInvestor said:

enthusiasticsaver said:

Just looking at the charges is a bit like comparing apples and pears and having invested with VLS60 for about 6 years I moved to an IFA last year and was under no illusion that the charges would be higher.  The performance of the VLS60 though over the last 12 months is 4.4% whereas the portfolio under my IFA has returned  almost 10% with a similar asset allocation of 60% equities and 40% fixed term.  A few of the funds he chose have performed very well over the last few months though so that has skewed the results.  The charges are higher but the return is too so overall it has performed better than in a passive multi asset fund.  I am only speaking from a personal point of view though and of course you could get investors with other IFAs producing completely different results. You cannot really only look at charges in isolation. 

An IFA (or anyone else for that matter) is unlikely to significantly outperform something like the LS range (or similar multi-asset low cost offerings) over the long term. 

Out-performing the Vanguard LS range is easy - the FTSE World index has outperformed VLS100 every year for the past 5 years.

Well it would do wouldn't it? Index trackers will always underperform the index they're tracking since they have charges.

Fidelity Index World class A has outperformed VLS100 every year for the past 5 years.  
Fidelity Index World Class A charges: 0.3%, 5 year performance: 89%
VLS100 charges: 0.22%, 5 year performance: 69%

MSCI World is DM only.

y're tracking different "indexes". Quick glance shows the Fidelity one thinks the "world" is 61% USA, whereas VLS only thinks 44% of the world is USA. USA seems to have done better than the rest of the world.

ETA also VLS is 22% UK, whereas Fidelity is only 4% UK.

So basically, USA stocks (and currency) did better than UK over the last 5 years.

Which nicely demonstrates my point that the primary difference between funds is asset allocation.  The danger I see with the VLS series is that the naive investors who would naturally default to a world tracker, especially after a little time on this forum, are being told that passive is always better than active, with VLS being the most frequently quoted option.  They are unlikely to appreciate such details may be far more important.  The right active is better than the wrong passive, and the right passive may well not exist.

Well exactly - and equally they might think that a better performing fund is intrinsically better rather than just happening to have a different asset allocation which turned out to be more favourable. Looking at the distribution of the two funds mentioned, I'd be opting for the VLS one as I think 61% USA is too much, plus a bias towards UK is more suitable as it lessens currency risk (eg if the pound strengthens all foreign investments will fall in GBP terms). I wouldn't just go for the best performer over the last 5 years.

but £ has been depreciating for a century.

Perhaps the $ has had it's day...........
Pound was trading against the $ at 1.08 in 1985. 

Ah, the "start counting from here" game.

BritishInvestor

Linton said:

BritishInvestor said:

Linton said:

BritishInvestor said:

dunstonh said:

BritishInvestor said:

enthusiasticsaver said:

Just looking at the charges is a bit like comparing apples and pears and having invested with VLS60 for about 6 years I moved to an IFA last year and was under no illusion that the charges would be higher.  The performance of the VLS60 though over the last 12 months is 4.4% whereas the portfolio under my IFA has returned  almost 10% with a similar asset allocation of 60% equities and 40% fixed term.  A few of the funds he chose have performed very well over the last few months though so that has skewed the results.  The charges are higher but the return is too so overall it has performed better than in a passive multi asset fund.  I am only speaking from a personal point of view though and of course you could get investors with other IFAs producing completely different results. You cannot really only look at charges in isolation. 

An IFA (or anyone else for that matter) is unlikely to significantly outperform something like the LS range (or similar multi-asset low cost offerings) over the long term. 

That is easier than you seem to think.

Given that the vast, vast majority of people that I see attempt it (on a professional and individual level), I'd be keen to understand how. Edges are extraordinarily hard to come by in the market.

I suggest:
Primarily: Go for higher risk/return. Optimise diversification and avoid over-reliance on any particular fund, factor, geography, sector or company. Consider momentum effects where appropriate at the sector level.
At a second level choose niche funds with a good record but avoid compromising the primary strategies.

Risk/return: Outperform means on a risk-adjusted basis. (As an aside, realistically not many people would be happy with >100% equities (e.g. more than LS100))
Choosing niche funds goes back to my point about the difficulty of picking future winners. For niche funds you'd want to make sure you weren't accepting liquidity risk along with all the other risks. I see professionals (DFMs etc) attempt to pick niche funds and market events such as Covid emphasize what can go wrong.

1) "Outperformance" should be based on equivalent risk.  Active funds give you far more ability to manipulate this.  Unless you go for seriously niche ETFs the passive funds available are very limited. Interestingly SPICAV doesnt make any allowances here.
2) How can you invest in more than 100% equity, which in practice needs an esoteric ETF?  No, you just go for a larger % of the higher risk sectors.  Small companies and tech have performed much better than the broad indexes over the past 10 years and have generally recovered better from the Covid falls.  The effect has clearly not been just random variation, but represents underlying trends.
3)  Yes you need to be aware of the risk/return short term effects.  That is part of the objectives basis for your overall asset allocation, which is why I put fund choice as a secondary activity in my high level strategy.

"Outperformance" should be based on equivalent risk. "
Agreed, this is key, but IMO not as straightforward as looking at relative volatility
1. Factor risk - taking a tilt away from the market carries potential extra risks
2. Concentration/sector risk - a star fund manager holding 30 shares covering a subset of global sectors is a very different risk from a global equities tracker containing ~10000 equities
3. Fund manager risk - change of investing style which no longer matches what an investor signed up for
"How can you invest in more than 100% equity, which in practice needs an esoteric ETF?"
100% equities being 100% global equities. In addition to the above risks, tilts to EM and/or small cap have carried greater historical volatility.
"Small companies and tech have performed much better than the broad indexes over the past 10 years and have generally recovered better from the Covid falls. "
I'm seeing MSCI World returning 219% vs MSCI World small cap 203% over the last 10 years, so don't see small cap outperformance over the last decade nor in recent months. Agreed on tech (and large cap growth in general) over the last decade but would be wary of seeing that as a long term trend given the current disparity between growth and value (which according to some is at record levels)

"which is why I put fund choice as a secondary activity in my high-level strategy."
Agreed.

BritishInvestor

Linton said:

BritishInvestor said:

Linton said:

BritishInvestor said:

garmeg said:

BritishInvestor said:

enthusiasticsaver said:

Just looking at the charges is a bit like comparing apples and pears and having invested with VLS60 for about 6 years I moved to an IFA last year and was under no illusion that the charges would be higher.  The performance of the VLS60 though over the last 12 months is 4.4% whereas the portfolio under my IFA has returned  almost 10% with a similar asset allocation of 60% equities and 40% fixed term.  A few of the funds he chose have performed very well over the last few months though so that has skewed the results.  The charges are higher but the return is too so overall it has performed better than in a passive multi asset fund.  I am only speaking from a personal point of view though and of course you could get investors with other IFAs producing completely different results. You cannot really only look at charges in isolation. 

An IFA (or anyone else for that matter) is unlikely to significantly outperform something like the LS range (or similar multi-asset low cost offerings) over the long term. 

Depends on the funds chosen.

Terry Smith has significantly outperformed for years.

As did Neil Woodford, until he didn't.

1. You sure Fundsmith has outperformed if benchmarked appropriately?
Ditto Woodford
https://finalytiq.co.uk/woodford-vs-ftse-uk-equity-income-lets-set-the-record-straight/
You have to remember the (active) investment management industry makes money from selling the dream of outperformance.

2. If anyone has the ability to pick these future "outperforming" funds/sectors I'm all ears.

This has just been released and is a good read
https://www.amazon.co.uk/Incredible-Shrinking-Alpha-2nd-successful-ebook/dp/B08BX5HRLJ/ref=sr_1_1?

1)  What is your passive alternative to Fundsmith?  Can you actually invest in your "appropriate benchmark"?
2) Woodford's glory days were in the 1990s and early 2000s which are not covered in your link.  His tortoise vs hare strategy was based on solid highly profitable income generating companies and was extraordinarily successful before large scale tech driven growth took over as a primary driver of the markets.  He was one of the few managers with the authority to stick to his approach during the .com boom/crash. 

1. Most investors taking a factor-based investing approach (which I'd categorise as different from passive, and one that you'd need to use to attempt to emulate Fundsmith) tend to invest in a diametrically opposite fashion - small-cap value (see Dimensional etc). I'm sure there are reasonable approximations but it's just not a common investing "style" that I come across very often.
2. This link goes back to the late 90s. 
https://finalytiq.co.uk/woodford-vs-ftse-uk-equity-income-lets-set-the-record-straight/

1) You can get broad factor based ETFs but passive funds find it difficult to keep out the no-hopers.  This is a particular problem with income funds.  People can do the job much more effectively. But I would not see Fundsmith as particularly factor based, at least in terms of the standard factors, as it contains only 29 companies spread almost entirely over just 3 disparate sectors, including consumer staples and techs.  Some other managers appear to have a similar approach though rather less extreme - Lindsall Train and Baillie Gifford for example.
2) The only reference to pre .com crash years is the comparison with the UK FTSE Equity Income TR Index, perhaps not one of the most well known ones.  Woodford chose to invest single-mindedly in that area despite pressures to do otherwise.  There was (and AFAIK still is) no UK FTSE Equity Income TR tracker.  IUKD, I believe the only UK Income tracker around at that time, was a catastrophe in the Great Crash from which it has barely recovered for the reason given in (1).

1. I guess it depends on what you mean by no hopers but some factor-based offerings (such as Dimensional) have a robust rules-based approach (which could, for example, include a tilt to quality factor) in an attempt to exclude the chaff. I've not seen evidence to suggest humans doing the job more effectively. 
In terms of Fundsmith factors tilts, looking at value and size - Fundsmith is certainly tilted away from small cap value (if we accept P/B as a proxy for value)
https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000LK2Q&tab=3
Av market cap of 61.1bn and P/B of 6.98 vs
https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000XXVV&tab=3
 Av market cap of 41.4BN and P/B of 1.94
2. Take your point that there wasn't a decent tracker to emulate Woodford (if that's what you wanted to do), but my point is more around supposed alpha actually being beta (which is pretty much free these days).

short_bread

Got directed here from the more recent "to use an IFA or not" thread. The debate seems to have run its course, but I know Vanguard do have a FTSE UK Equity income fund. But with the UK market-cap indices yielding so high anyway Vs global indices, is there an argument that you could get plenty of UK equity income (emphasis on the income) exposure via a FTSE 100 or FTSE all share tracker, or even the FTSE 250 going off current yields.

mark13

If you happy to check funds, shares, trusts etc then I would say DIY.  Its fairly simple to find information on the internet and to build a portfolio of funds to generate income and growth. By comparison my IFA managed portfolio is still down YTD and my own ISA portfolio is considerably up . DIY  for me   gives me greater focus and flexibility and doesn't require too much tinkering .