Comparing IFA managed portfolio to Vanguard LS60

enthusiasticsaver

Thrugelmir said:

And if your IFA had underperformed your choosen benchmark? Would you now be sacking them. Holding a concentrated fund that performs exceptionally is going to result in a better overall return. What's the performance excluding the Baillie Gifford American fund ? 

Not after just one year no.  We had said initially we would look at it each year and review after 5.  There are a few other funds which have performed at 25% and 35% and the  UK funds are running at about 5% and 8% and the strategic bonds are also around 8% but this is to avoid volatility.  I have not removed the Baillie Gifford because it is not just performance I am looking at,  it is also the overall experience of using an IFA approach. 

MaxiRobriguez

Two things:

1) VLS overweights UK which will have dragged on performance this year. That might reverse next year. You can't conclude IFA's are better based on 1 years performance.
2) You're looking at charts, but make sure you're comparing apples with apples. Are all the funds in question, both in your porfolio and VLS, accumulation funds? If one is an income fund then chart will show lower return but you may have additional cash in the wrapper which you're not accounting for... 

fred246

I remember the OP describing the Baillie Gifford American fund as cautious. It's rated 6 out of 7 in investment risk.

enthusiasticsaver

dunstonh said:

Haha.  Wouldn't we all? The thing is though I guess it takes a lot of research and expertise and my IFA and his team review the funds quarterly so I guess other IFAS are the same. They also look at management structure and investment processes  as well as performance.  I just really wasn't confident that I knew what I was doing when looking at fund performance reports. 

I wonder if they are using the same research company as us as ours does quarterly updates and the due diligence.  Although there are several support companies out there that offer their services to IFAs which are variations of that theme.

With this method, the IFA takes the cost of buying in the research and data and the IFA can implement it on multiple platforms/providers etc.     Unlike the DFM method where the IFA gets the DFM to do all the work and gets the investor to pay for it and is limited to only platforms that offer that DFM.

That is interesting and I confess I do not know if they do their own research or get a support company to do it.  The portfolio has now grown large enough to warrant 6 monthly reviews so I will ask at the next review in April.

Prism

fred246 said:

I remember the OP describing the Baillie Gifford American fund as cautious. It's rated 6 out of 7 in investment risk.

I assume you are misremembering then. I doubt anyone would describe any equity fund as cautious on its own. It can however be part of a cautious/balanced/adventurous portfolio in whatever % split is required to make it work.

enthusiasticsaver

fred246 said:

I remember the OP describing the Baillie Gifford American fund as cautious. It's rated 6 out of 7 in investment risk.

No I did not describe the fund as cautious.  It is one fund in a cautious portfolio counter balanced no doubt by the strategic bonds.  I do not imagine all the funds in a cautious portfolio are low risk. It is one of 14 funds. 

enthusiasticsaver

MaxiRobriguez said:

Two things:

1) VLS overweights UK which will have dragged on performance this year. That might reverse next year. You can't conclude IFA's are better based on 1 years performance.
2) You're looking at charts, but make sure you're comparing apples with apples. Are all the funds in question, both in your porfolio and VLS, accumulation funds? If one is an income fund then chart will show lower return but you may have additional cash in the wrapper which you're not accounting for... 

Yes, I definitely agree that probably the overweight on UK  funds in the VLS has negatively impacted the performance this year.  The VLS we held was an accumulation fund and most of the funds in our current portfolio are also accumulation but the performance percentage of the overall portfolio of 13.61% includes the cash fund we hold. 

No I certainly could not conclude that IFAs are better based on this years experience but it is a start.   All I can conclude is that our IFA has done better than the global passive multi asset fund it was previously invested in and probably the one we would have stayed in considering my limited knowledge of how to pick investment funds. Also this is just year 1 so it could be different next year.  Thanks for your input though. 

fred246

enthusiasticsaver said:

fred246 said:

I remember the OP describing the Baillie Gifford American fund as cautious. It's rated 6 out of 7 in investment risk.

No I did not describe the fund as cautious.  It is one fund in a cautious portfolio counter balanced no doubt by the strategic bonds.  I do not imagine all the funds in a cautious portfolio are low risk. It is one of 14 funds. 

You did describe it as cautious because I remember looking it up. None of my investments have been higher than 5 and I wondered what 7 would be. I am not trawling through 11300 posts looking for it though!

Thrugelmir

enthusiasticsaver said:

Thrugelmir said:

And if your IFA had underperformed your choosen benchmark? Would you now be sacking them. Holding a concentrated fund that performs exceptionally is going to result in a better overall return. What's the performance excluding the Baillie Gifford American fund ? 

  it is also the overall experience of using an IFA approach. 

I'm more than happy to manage my own investments for a broad range of reasons. Equally I fully understand if someone would wish to use an IFA. Or even a combination of the two. 

enthusiasticsaver

Thrugelmir said:

enthusiasticsaver said:

Thrugelmir said:

And if your IFA had underperformed your choosen benchmark? Would you now be sacking them. Holding a concentrated fund that performs exceptionally is going to result in a better overall return. What's the performance excluding the Baillie Gifford American fund ? 

  it is also the overall experience of using an IFA approach. 

I'm more than happy to manage my own investments for a broad range of reasons. Equally I fully understand if someone would wish to use an IFA. Or even a combination of the two. 

I fully respect that and am not saying in any way that an IFA approach is better for anyone or everyone.  Just that our first year has been positive for us.