Lindsell Train Global Equity

AnotherJoe

itwasntme001 said:

Sailtheworld said:

itwasntme001 said:

Sailtheworld said:

itwasntme001 said:

Sailtheworld said:

itwasntme001 said:

Sailtheworld said:

itwasntme001 said:

I keep hearing that young people should be invested close to 100% equities.  I am in my 30s and I am reducing my risk.  Never was 100% equities.  At a cost of lost opportunity, I sleep well at night.  I am looking to reduce risk from 60-70% equities down to 50% equities.  Almost all remaining investments in active funds.

This year has been a gift for people who really want to consider portfolio allocation.  Use this time wisely.

When you're, say, 30 you're already taking a lower risk. You've got decades of earnings ahead and the timeframe to ride out numerous negative events and still come out on top. Choosing 50% equities is choosing lower returns i.e. expensive sleep.

I completely agree.  But I see things slightly differently.  Whilst risk generally comes with reward, it by no means is guaranteed even in the longer term.  IMO I rather place my capital in assets with better risk reward and at this stage, public equities like tracker funds do not offer this.

The difference is you're claiming an investment edge because you're saying you can identify which assets have the best risk to reward ratio. Nothing wrong with that of course but you're going to be talking at slightly cross purposes with those that don't  - they have to use the rather blunt instrument of equity % to adjust risk.

Of course you sleep well.

Not claiming to have an edge in anything.  All the information I have read is available to the general public.  Future expected returns are going to be low at these levels.  Merely saying the risk reward is not there and its more optimal to invest in other assets.  Crucially diversification matters more so then ever before.

Knowing that equity returns from the FTSE All World Index will be 0% for a decade is a huge advantage. I think it hit a record high today so the other market participants have a different view.

Crucially you're not diversifying (why would you?) but concentrating non-equity risks.

I don't know anything for certain about equity markets.  What I do know is that low real returns should be expected.  0% REAL returns, not nominal.

Saying that market participants are always right and that I am wrong because they decided to price markets "at a high" today, is similar to what a technical analyst or chartist would say.  Completely voodoo analysis.

Equities are a risky asset class and should be treated as such.  They do not owe you anything whether you hold for 1 year or 10 years.  IMO 100% or even 75% equities at current valuations for a global market weight fund is being overly aggressive.

When the share of GDP/profits shifts away from capital and towards labour, you will see what I mean.

You're saying the other participants are wrong so you're taking a position from which you'll profit when they come around to your way of thinking.

I'm not saying you're wrong. I'm just surprised you don't see this as declaring an edge.

I'm not saying anyone is wrong.  The market price is the market price.  It is up to individuals to allocate capital as suitable to them.  Would you think that market participants were right (whatever that is meant to mean) at the dot-com peak and so an investor back then should just hold into a bubble?

Thats an invalid question because you only know when the peak was in retrospect. Some people were saying it was a bubble three years ago. I know someone who got out then, fully cash, AFAIK hasnt gone back in since. Probably lost at least a million since thats what he sold up.

 

 

itwasntme001

AnotherJoe said:

itwasntme001 said:

Sailtheworld said:

itwasntme001 said:

Sailtheworld said:

itwasntme001 said:

Sailtheworld said:

itwasntme001 said:

Sailtheworld said:

itwasntme001 said:

I keep hearing that young people should be invested close to 100% equities.  I am in my 30s and I am reducing my risk.  Never was 100% equities.  At a cost of lost opportunity, I sleep well at night.  I am looking to reduce risk from 60-70% equities down to 50% equities.  Almost all remaining investments in active funds.

This year has been a gift for people who really want to consider portfolio allocation.  Use this time wisely.

When you're, say, 30 you're already taking a lower risk. You've got decades of earnings ahead and the timeframe to ride out numerous negative events and still come out on top. Choosing 50% equities is choosing lower returns i.e. expensive sleep.

I completely agree.  But I see things slightly differently.  Whilst risk generally comes with reward, it by no means is guaranteed even in the longer term.  IMO I rather place my capital in assets with better risk reward and at this stage, public equities like tracker funds do not offer this.

The difference is you're claiming an investment edge because you're saying you can identify which assets have the best risk to reward ratio. Nothing wrong with that of course but you're going to be talking at slightly cross purposes with those that don't  - they have to use the rather blunt instrument of equity % to adjust risk.

Of course you sleep well.

Not claiming to have an edge in anything.  All the information I have read is available to the general public.  Future expected returns are going to be low at these levels.  Merely saying the risk reward is not there and its more optimal to invest in other assets.  Crucially diversification matters more so then ever before.

Knowing that equity returns from the FTSE All World Index will be 0% for a decade is a huge advantage. I think it hit a record high today so the other market participants have a different view.

Crucially you're not diversifying (why would you?) but concentrating non-equity risks.

I don't know anything for certain about equity markets.  What I do know is that low real returns should be expected.  0% REAL returns, not nominal.

Saying that market participants are always right and that I am wrong because they decided to price markets "at a high" today, is similar to what a technical analyst or chartist would say.  Completely voodoo analysis.

Equities are a risky asset class and should be treated as such.  They do not owe you anything whether you hold for 1 year or 10 years.  IMO 100% or even 75% equities at current valuations for a global market weight fund is being overly aggressive.

When the share of GDP/profits shifts away from capital and towards labour, you will see what I mean.

You're saying the other participants are wrong so you're taking a position from which you'll profit when they come around to your way of thinking.

I'm not saying you're wrong. I'm just surprised you don't see this as declaring an edge.

I'm not saying anyone is wrong.  The market price is the market price.  It is up to individuals to allocate capital as suitable to them.  Would you think that market participants were right (whatever that is meant to mean) at the dot-com peak and so an investor back then should just hold into a bubble?

Thats an invalid question because you only know when the peak was in retrospect. Some people were saying it was a bubble three years ago. I know someone who got out then, fully cash, AFAIK hasnt gone back in since. Probably lost at least a million since thats what he sold up.

 

 

But it is valid in the context of the debate.  I am merely saying that what the market participants decide is the market price (and whether this is the correct price or not) is irrelevant to decisions about asset allocation and risk management.

itwasntme001

Prism said:

Sailtheworld said:

itwasntme001 said:

Sailtheworld said:

itwasntme001 said:

I keep hearing that young people should be invested close to 100% equities.  I am in my 30s and I am reducing my risk.  Never was 100% equities.  At a cost of lost opportunity, I sleep well at night.  I am looking to reduce risk from 60-70% equities down to 50% equities.  Almost all remaining investments in active funds.

This year has been a gift for people who really want to consider portfolio allocation.  Use this time wisely.

When you're, say, 30 you're already taking a lower risk. You've got decades of earnings ahead and the timeframe to ride out numerous negative events and still come out on top. Choosing 50% equities is choosing lower returns i.e. expensive sleep.

I completely agree.  But I see things slightly differently.  Whilst risk generally comes with reward, it by no means is guaranteed even in the longer term.  IMO I rather place my capital in assets with better risk reward and at this stage, public equities like tracker funds do not offer this.

The difference is you're claiming an investment edge because you're saying you can identify which assets have the best risk to reward ratio. Nothing wrong with that of course but you're going to be talking at slightly cross purposes with those that don't  - they have to use the rather blunt instrument of equity % to adjust risk.

Of course you sleep well.

There are alternate rebalancing models beyond a fixed % equity/bond split, which don't try and predict future returns or consider valuations. Moving the allocations around are not always about having an edge.

Not sure if itwasntme001 is following one or just going off gut feeling.

Not following any specific rebalancing model.  So I suppose you could say it is a "gut feeling".  But it is more about reducing risk to levels I am more comfortable taking which has a lot to do with valuations, macro environment etc as well as personal risk tolerance.

It is worth noting that I did a similar exercise last year which was just luck given the events that occurred earlier this year.  Looking to reduce risk further.  Will be investing in wealth preservation funds which have a 30-40% allocation to risky assets anyway.  But at least the risky allocation is well thought out unlike market weighted tracker funds.

The other, albeit less of a factor, reason for reducing is that I do not need to generate a lot of returns as my portfolio is into the 7 figures so do not see the need to risk my capital.  Wealth preservation has become more important to me.

Thrugelmir

AnotherJoe said:

itwasntme001 said:

Sailtheworld said:

itwasntme001 said:

Sailtheworld said:

itwasntme001 said:

Sailtheworld said:

itwasntme001 said:

Sailtheworld said:

itwasntme001 said:

I keep hearing that young people should be invested close to 100% equities.  I am in my 30s and I am reducing my risk.  Never was 100% equities.  At a cost of lost opportunity, I sleep well at night.  I am looking to reduce risk from 60-70% equities down to 50% equities.  Almost all remaining investments in active funds.

This year has been a gift for people who really want to consider portfolio allocation.  Use this time wisely.

When you're, say, 30 you're already taking a lower risk. You've got decades of earnings ahead and the timeframe to ride out numerous negative events and still come out on top. Choosing 50% equities is choosing lower returns i.e. expensive sleep.

I completely agree.  But I see things slightly differently.  Whilst risk generally comes with reward, it by no means is guaranteed even in the longer term.  IMO I rather place my capital in assets with better risk reward and at this stage, public equities like tracker funds do not offer this.

The difference is you're claiming an investment edge because you're saying you can identify which assets have the best risk to reward ratio. Nothing wrong with that of course but you're going to be talking at slightly cross purposes with those that don't  - they have to use the rather blunt instrument of equity % to adjust risk.

Of course you sleep well.

Not claiming to have an edge in anything.  All the information I have read is available to the general public.  Future expected returns are going to be low at these levels.  Merely saying the risk reward is not there and its more optimal to invest in other assets.  Crucially diversification matters more so then ever before.

Knowing that equity returns from the FTSE All World Index will be 0% for a decade is a huge advantage. I think it hit a record high today so the other market participants have a different view.

Crucially you're not diversifying (why would you?) but concentrating non-equity risks.

I don't know anything for certain about equity markets.  What I do know is that low real returns should be expected.  0% REAL returns, not nominal.

Saying that market participants are always right and that I am wrong because they decided to price markets "at a high" today, is similar to what a technical analyst or chartist would say.  Completely voodoo analysis.

Equities are a risky asset class and should be treated as such.  They do not owe you anything whether you hold for 1 year or 10 years.  IMO 100% or even 75% equities at current valuations for a global market weight fund is being overly aggressive.

When the share of GDP/profits shifts away from capital and towards labour, you will see what I mean.

You're saying the other participants are wrong so you're taking a position from which you'll profit when they come around to your way of thinking.

I'm not saying you're wrong. I'm just surprised you don't see this as declaring an edge.

I'm not saying anyone is wrong.  The market price is the market price.  It is up to individuals to allocate capital as suitable to them.  Would you think that market participants were right (whatever that is meant to mean) at the dot-com peak and so an investor back then should just hold into a bubble?

Thats an invalid question because you only know when the peak was in retrospect. Some people were saying it was a bubble three years ago. I know someone who got out then, fully cash, AFAIK hasnt gone back in since. Probably lost at least a million since thats what he sold up.

 

 

That infamous line from Dirty Harry springs to mind. 

“You've got to ask yourself one question: 'Do I feel lucky? ' Well, do ya, punk?” 

Kendall80

I sold out of this fund in 2015

Moe_The_Bartender

Latest fund update is here:

https://www.lindselltrain.com/~/media/Files/L/Lindsell-Train-V2/reports/ltglobal-equity-fund/2020/LTGEF_MR_2020_09.pdf

Johnnyboy11

Unilever at 8.81% and the top five holdings nearing 40% of the fund. To me this seems like an extremely risky proposition, something is up with LTGE...

Thrugelmir

Johnnyboy11 said:

Unilever at 8.81% and the top five holdings nearing 40% of the fund. To me this seems like an extremely risky proposition, something is up with LTGE...

Risky in what sense? 

Prism

Johnnyboy11 said:

Unilever at 8.81% and the top five holdings nearing 40% of the fund. To me this seems like an extremely risky proposition, something is up with LTGE...

Unilever has been around an 8% holding in LTGE for the last 5 years. Its a high conviction fund with around 20 or so holdings. If you were ok with that a few years ago why the change of heart. However I have a fund with 6 of its holdings above 10% so maybe I am bias.

Sailtheworld

Prism said:

Johnnyboy11 said:

Unilever at 8.81% and the top five holdings nearing 40% of the fund. To me this seems like an extremely risky proposition, something is up with LTGE...

Unilever has been around an 8% holding in LTGE for the last 5 years. Its a high conviction fund with around 20 or so holdings. If you were ok with that a few years ago why the change of heart. However I have a fund with 6 of its holdings above 10% so maybe I am bias.

The change of heart is probably because past performance was good but recent performance has been pedestrian.

5 years ago the fund was £1,208m in size and today it's £7,776m - it's new money drawn in by past performance. It was 'only' £5.672m in January 2019 so a good proportion of the capital is very new and somewhat disappointed.

It'll be the same for a lot of today's flavour of the month funds - lots of new money hoping for yesterday's performance.