SIPP Flexi access drawdown based on Vanguard Lifestrategy x% equities

[Deleted User]

BritishInvestor said:

Deleted_User said:

We probably need to define “passive”. 

Option 1: whole of the market plain vanilla index funds.
Option 2: Any fund which is managed passively based on computers and equations without managers picking individual stocks. VBR is one example (small value US stocks). There are thousands of funds which slice and dice the market based on some predefined criteria. 

Today an awful lot of funds fall into the second category. There are cheep funds which allow you to pick any factor/industry/geography or a combination of factors. Not only is this more cost efficient, human emotion is bad for investment.  Active human-managed funds are good for some people, chiefly the fund managers. Otherwise they couldn’t afford to buy sports teams. 

#2 is factor investing in my eyes which I would deem to be distinct from passive.
https://en.wikipedia.org/wiki/Factor_investing

Fair enough. So how about someone who invests into US via S&P500?  That’s large US corporations. Does not have small US companies.   Are they passive? Or are they “factor investors”? I just don’t think its black and white. 

There are some radicals of passive investing who believe that markets are always efficient. If you see a $100 on the pavement, it must be your imagination because otherwise someone would have already picked it up. 

My thinking is different. The objective isnt to maximize gains.  You win this  game by not losing ones shirt.  Not good enough to have you outperform the market with a Woodford fund over a decade if you then lost most of it in a day.  

Two things matter for a given asset allocation: 1. Diversification (free lunch) and 2. Low cost, which is easily achievable today even if you want to own the world.  Still, if I see a closed fund which is about to be shut down and distribute money trading 5% below NAV then I’ll buy it. Not “passive” but I’ll pick up the cash.   

So, I am not dogmatic, but if I see a table linked above, the message I see is “passive funds outperform in most cases” rather than 1 particular region is fundamentally different from the rest of the world because it stood out over the last 10 years.  Tells me nothing about the next 10 years. We’ll probably see a completely different regional outperformance for active funds.

BritishInvestor

Deleted_User said:

BritishInvestor said:

Deleted_User said:

We probably need to define “passive”. 

Option 1: whole of the market plain vanilla index funds.
Option 2: Any fund which is managed passively based on computers and equations without managers picking individual stocks. VBR is one example (small value US stocks). There are thousands of funds which slice and dice the market based on some predefined criteria. 

Today an awful lot of funds fall into the second category. There are cheep funds which allow you to pick any factor/industry/geography or a combination of factors. Not only is this more cost efficient, human emotion is bad for investment.  Active human-managed funds are good for some people, chiefly the fund managers. Otherwise they couldn’t afford to buy sports teams. 

#2 is factor investing in my eyes which I would deem to be distinct from passive.
https://en.wikipedia.org/wiki/Factor_investing

Fair enough. So how about someone who invests into US via S&P500?  That’s large US corporations. Does not have small US companies.   Are they passive? Or are they “factor investors”? I just don’t think its black and white. 

There are some radicals of passive investing who believe that markets are always efficient. If you see a $100 on the pavement, it must be your imagination because otherwise someone would have already picked it up. 

My thinking is different. The objective isnt to maximize gains.  You win this  game by not losing ones shirt.  Not good enough to have you outperform the market with a Woodford fund over a decade if you then lost most of it in a day.  

Two things matter for a given asset allocation: 1. Diversification (free lunch) and 2. Low cost, which is easily achievable today even if you want to own the world.  Still, if I see a closed fund which is about to be shut down and distribute money trading 5% below NAV then I’ll buy it. Not “passive” but I’ll pick up the cash.   

So, I am not dogmatic, but if I see a table linked above, the message I see is “passive funds outperform in most cases” rather than 1 particular region is fundamentally different from the rest of the world because it stood out over the last 10 years.  Tells me nothing about the next 10 years. We’ll probably see a completely different regional outperformance for active funds.

"So how about someone who invests into US via S&P500?  That’s large US corporations. Does not have small US companies.   Are they passive? Or are they “factor investors”? I just don’t think its black and white. "

It's a plain vanilla market cap weighted passive tracker with no tilts away from that (within the subset of the market that the benchmark tracks), but I take your point.

"There are some radicals of passive investing who believe that markets are always efficient. If you see a $100 on the pavement, it must be your imagination because otherwise someone would have already picked it up. "

I think it's reasonable to assume that for private investors, either on a DIY basis or with the professional products that are available to them, the market is broadly efficient.

"My thinking is different. The objective isnt to maximize gains.  You win this  game by not losing ones shirt.  Not good enough to have you outperform the market with a Woodford fund over a decade if you then lost most of it in a day.  "

Agreed, but if you look at the top selling and best performing funds there seems some  overlap
https://www.ii.co.uk/funds/top-investment-funds
which suggest the "typical" investor might prefer "what is working now" without considering the potential downsides.

Linton

How would you classify Vanguard FTSE UK Equity Income Index Fund?  I believe the index was specially commisioned by Vanguard and may not be available to anyone else - as far as I can see no ther fund manager uses it..  The Index includes rules to prevent individual sectors or companies taking an excessive %. 

It seems to me that this is stretching the definition of passive to breaking point or beyond.  Is it any different to a robo fund?

Thrugelmir

BritishInvestor said:

Deleted_User said:

BritishInvestor said:

Deleted_User said:

We probably need to define “passive”. 

Option 1: whole of the market plain vanilla index funds.
Option 2: Any fund which is managed passively based on computers and equations without managers picking individual stocks. VBR is one example (small value US stocks). There are thousands of funds which slice and dice the market based on some predefined criteria. 

Today an awful lot of funds fall into the second category. There are cheep funds which allow you to pick any factor/industry/geography or a combination of factors. Not only is this more cost efficient, human emotion is bad for investment.  Active human-managed funds are good for some people, chiefly the fund managers. Otherwise they couldn’t afford to buy sports teams. 

#2 is factor investing in my eyes which I would deem to be distinct from passive.
https://en.wikipedia.org/wiki/Factor_investing

Fair enough. So how about someone who invests into US via S&P500?  That’s large US corporations. Does not have small US companies.   Are they passive? Or are they “factor investors”? I just don’t think its black and white. 

There are some radicals of passive investing who believe that markets are always efficient. If you see a $100 on the pavement, it must be your imagination because otherwise someone would have already picked it up. 

My thinking is different. The objective isnt to maximize gains.  You win this  game by not losing ones shirt.  Not good enough to have you outperform the market with a Woodford fund over a decade if you then lost most of it in a day.  

Two things matter for a given asset allocation: 1. Diversification (free lunch) and 2. Low cost, which is easily achievable today even if you want to own the world.  Still, if I see a closed fund which is about to be shut down and distribute money trading 5% below NAV then I’ll buy it. Not “passive” but I’ll pick up the cash.   

So, I am not dogmatic, but if I see a table linked above, the message I see is “passive funds outperform in most cases” rather than 1 particular region is fundamentally different from the rest of the world because it stood out over the last 10 years.  Tells me nothing about the next 10 years. We’ll probably see a completely different regional outperformance for active funds.

"So how about someone who invests into US via S&P500?  That’s large US corporations. Does not have small US companies.   Are they passive? Or are they “factor investors”? I just don’t think its black and white. "

The S&P has been the most highly researched market in the world for decades. John Bogles concept of passively tracking that index. Which came from a research paper published a couple of years earlier. Very different to other markets that investors now invest in and "passively" track. A fact which didn't go unnoticed by Bogle himself. 

Prism

Over the years I have used several index funds tracking - global technology, global health, North America, global AI & automation, global government bonds (hedged) and global property securities. I'm not sure how many of those really class as passive investing and they were always used as an element of what I would call an active portfolio. 

[Deleted User]

Linton said:

How would you classify Vanguard FTSE UK Equity Income Index Fund?  I believe the index was specially commisioned by Vanguard and may not be available to anyone else - as far as I can see no ther fund manager uses it..  The Index includes rules to prevent individual sectors or companies taking an excessive %. 

It seems to me that this is stretching the definition of passive to breaking point or beyond.  Is it any different to a robo fund?

I am not sure if Vanguard calls it “passive” but these days they sell a lot of factor and active funds. The real question: does it meet your investment policy. And if your plan says “minimize buying and selling by investing in a fund replicating a broad/whole of the market index” then the answer is “no”. 

Robo advisors tend to buy a bunch of funds on your behalf and move in and out of funds, so not really the same. 

[Deleted User]

Thrugelmir said:

BritishInvestor said:

Deleted_User said:

BritishInvestor said:

Deleted_User said:

We probably need to define “passive”. 

Option 1: whole of the market plain vanilla index funds.
Option 2: Any fund which is managed passively based on computers and equations without managers picking individual stocks. VBR is one example (small value US stocks). There are thousands of funds which slice and dice the market based on some predefined criteria. 

Today an awful lot of funds fall into the second category. There are cheep funds which allow you to pick any factor/industry/geography or a combination of factors. Not only is this more cost efficient, human emotion is bad for investment.  Active human-managed funds are good for some people, chiefly the fund managers. Otherwise they couldn’t afford to buy sports teams. 

#2 is factor investing in my eyes which I would deem to be distinct from passive.
https://en.wikipedia.org/wiki/Factor_investing

Fair enough. So how about someone who invests into US via S&P500?  That’s large US corporations. Does not have small US companies.   Are they passive? Or are they “factor investors”? I just don’t think its black and white. 

There are some radicals of passive investing who believe that markets are always efficient. If you see a $100 on the pavement, it must be your imagination because otherwise someone would have already picked it up. 

My thinking is different. The objective isnt to maximize gains.  You win this  game by not losing ones shirt.  Not good enough to have you outperform the market with a Woodford fund over a decade if you then lost most of it in a day.  

Two things matter for a given asset allocation: 1. Diversification (free lunch) and 2. Low cost, which is easily achievable today even if you want to own the world.  Still, if I see a closed fund which is about to be shut down and distribute money trading 5% below NAV then I’ll buy it. Not “passive” but I’ll pick up the cash.   

So, I am not dogmatic, but if I see a table linked above, the message I see is “passive funds outperform in most cases” rather than 1 particular region is fundamentally different from the rest of the world because it stood out over the last 10 years.  Tells me nothing about the next 10 years. We’ll probably see a completely different regional outperformance for active funds.

"So how about someone who invests into US via S&P500?  That’s large US corporations. Does not have small US companies.   Are they passive? Or are they “factor investors”? I just don’t think its black and white. "

The S&P has been the most highly researched market in the world for decades. 

The S&P isn’t the market. The S&P 500 is a slice of US stock market. US Total Market Index holds over 3500 stocks. 

Thrugelmir

Deleted_User said:

Thrugelmir said:

BritishInvestor said:

Deleted_User said:

BritishInvestor said:

Deleted_User said:

We probably need to define “passive”. 

Option 1: whole of the market plain vanilla index funds.
Option 2: Any fund which is managed passively based on computers and equations without managers picking individual stocks. VBR is one example (small value US stocks). There are thousands of funds which slice and dice the market based on some predefined criteria. 

Today an awful lot of funds fall into the second category. There are cheep funds which allow you to pick any factor/industry/geography or a combination of factors. Not only is this more cost efficient, human emotion is bad for investment.  Active human-managed funds are good for some people, chiefly the fund managers. Otherwise they couldn’t afford to buy sports teams. 

#2 is factor investing in my eyes which I would deem to be distinct from passive.
https://en.wikipedia.org/wiki/Factor_investing

Fair enough. So how about someone who invests into US via S&P500?  That’s large US corporations. Does not have small US companies.   Are they passive? Or are they “factor investors”? I just don’t think its black and white. 

There are some radicals of passive investing who believe that markets are always efficient. If you see a $100 on the pavement, it must be your imagination because otherwise someone would have already picked it up. 

My thinking is different. The objective isnt to maximize gains.  You win this  game by not losing ones shirt.  Not good enough to have you outperform the market with a Woodford fund over a decade if you then lost most of it in a day.  

Two things matter for a given asset allocation: 1. Diversification (free lunch) and 2. Low cost, which is easily achievable today even if you want to own the world.  Still, if I see a closed fund which is about to be shut down and distribute money trading 5% below NAV then I’ll buy it. Not “passive” but I’ll pick up the cash.   

So, I am not dogmatic, but if I see a table linked above, the message I see is “passive funds outperform in most cases” rather than 1 particular region is fundamentally different from the rest of the world because it stood out over the last 10 years.  Tells me nothing about the next 10 years. We’ll probably see a completely different regional outperformance for active funds.

"So how about someone who invests into US via S&P500?  That’s large US corporations. Does not have small US companies.   Are they passive? Or are they “factor investors”? I just don’t think its black and white. "

The S&P has been the most highly researched market in the world for decades. 

The S&P isn’t the market. The S&P 500 is a slice of US stock market. US Total Market Index holds over 3500 stocks. 

A market is where two people meet to trade. In this instance the stocks contained within the S&P 500 index. 

[Deleted User]

Thrugelmir said:

Deleted_User said:

Thrugelmir said:

BritishInvestor said:

Deleted_User said:

BritishInvestor said:

Deleted_User said:

We probably need to define “passive”. 

Option 1: whole of the market plain vanilla index funds.
Option 2: Any fund which is managed passively based on computers and equations without managers picking individual stocks. VBR is one example (small value US stocks). There are thousands of funds which slice and dice the market based on some predefined criteria. 

Today an awful lot of funds fall into the second category. There are cheep funds which allow you to pick any factor/industry/geography or a combination of factors. Not only is this more cost efficient, human emotion is bad for investment.  Active human-managed funds are good for some people, chiefly the fund managers. Otherwise they couldn’t afford to buy sports teams. 

#2 is factor investing in my eyes which I would deem to be distinct from passive.
https://en.wikipedia.org/wiki/Factor_investing

Fair enough. So how about someone who invests into US via S&P500?  That’s large US corporations. Does not have small US companies.   Are they passive? Or are they “factor investors”? I just don’t think its black and white. 

There are some radicals of passive investing who believe that markets are always efficient. If you see a $100 on the pavement, it must be your imagination because otherwise someone would have already picked it up. 

My thinking is different. The objective isnt to maximize gains.  You win this  game by not losing ones shirt.  Not good enough to have you outperform the market with a Woodford fund over a decade if you then lost most of it in a day.  

Two things matter for a given asset allocation: 1. Diversification (free lunch) and 2. Low cost, which is easily achievable today even if you want to own the world.  Still, if I see a closed fund which is about to be shut down and distribute money trading 5% below NAV then I’ll buy it. Not “passive” but I’ll pick up the cash.   

So, I am not dogmatic, but if I see a table linked above, the message I see is “passive funds outperform in most cases” rather than 1 particular region is fundamentally different from the rest of the world because it stood out over the last 10 years.  Tells me nothing about the next 10 years. We’ll probably see a completely different regional outperformance for active funds.

"So how about someone who invests into US via S&P500?  That’s large US corporations. Does not have small US companies.   Are they passive? Or are they “factor investors”? I just don’t think its black and white. "

The S&P has been the most highly researched market in the world for decades. 

The S&P isn’t the market. The S&P 500 is a slice of US stock market. US Total Market Index holds over 3500 stocks. 

A market is where two people meet to trade. In this instance the stocks contained within the S&P 500 index. 

Yes, they meet on NYSE, NASDAQ, etc. And trade US stocks. S&P 500 is a selection of 500 largest companies out of several thousand that make total market. 

Thrugelmir

Not the largest 500 companies as such. Entry to the index is determined by the number of shares in free float. Likewise the market capitalisation weighting in the index is calculated on free float. Not the actual number of shares in issue. As such a rising market capitalisation of a company isn't necessarily indicative of a company's fundamentals, but rather it reflects the stock's increase in value relative to shares outstanding.  Some people prefer equal-weighted indexes whereby each company's stock price movements have an equal impact on the index.