Comparing IFA managed portfolio to Vanguard LS60

Thrugelmir

Linton said:

enthusiasticsaver said:

Thrugelmir said:

enthusiasticsaver said:

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. 

I'd be concerned if the outcome wasn't positive in the last year. Even VLS60 is, with it's high UK weighting. The test for your IFA will be when market conditions become more challenging. What actual benchmark does your IFA compare against? That will provide a more meaningfull short term snap shot.  A few % of underperformance here and there over 10-20 years will mount up. 

The low to medium risk strategy is supposed to outperform the IMA 20-60% mixed investments. Not sure what IMA stands for. It has since 2007 when the company started. 

IMA, I believe now known as IA, is the investment managers association.  They are the trade association for UK fund managers.  They do things like defining the fund and industry sectors and they also publish an index for each fund sector whch can be used to represent the average fund in each sector.

January will be the time for reflection. When the quarter and year end positions get closed off. 

Moe_The_Bartender

Based on my experience,IFAs are pretty clueless when it comes to putting together a portfolio for their clients. I think most of them outsource the task to an outside party and use their advice as a basis for a portfolio based on the client's risk profile.

I parted company with mine as I wanted to decide my own investments rather than Fidelity EMEA which has an eyewatering OCF and mostly invested in banks and extraction industries. I wouldn’t invest in UK banks never mind Russian or South African ones.

dunstonh

Based on my experience,IFAs are pretty clueless when it comes to putting together a portfolio for their clients.

The studies and qualifications mean they shouldn't be clueless.   However, changes over the last 5 years have increased the governance and audit trail requirements that makes it very different to 5-10 years ago, let alone 20 or 30 years. Back in 1988, when IFAs came into existence, many (or even most) would have been clueless.  The early qualifications in the early 90s did little to improve that.  It improved knowledge but not to portfolio build level.  The later qualifications and the higher qualifications do cover portfolio build and different techniques.

 I think most of them outsource the task to an outside party and use their advice as a basis for a portfolio based on the client's risk profile.

Most do not. However, some do.    However, most will utilise outside companies to buy in data such as weightings and fund research/due diligence.  MiFIDII makes it difficult for most IFAs do to this in house with no external support.

Aminatidi

One of the things that fascinates me is the impact that a reasonably small allocation of high performance equities can make.

This is my own portfolio and whilst I haven't been positioned like this for 12 months if I had it would have returned around 22% this year.

Absolutely crazy for something that I suspect would look positively tortoise-like to many people.

Stock name	% Weight	Sector
1	Capital Gearing Trust Plc Ord GBP0.25	40.6%	[N/A]
2	Personal Assets Trust PLC Ord GBP12.50	39.9%	[N/A]
3	Baillie Gifford US Growth Trust plc Ord GBP0.01	8.4%	[N/A]
4	Scottish Mortgage Investment Trust Plc Ord GBP0.05	6.6%	[N/A]
5	Ruffer Investment Company Red Ptg Pref Shs GBP0.0001	4.4%	[N/A]

NottinghamKnight

enthusiasticsaver said:

BananaRepublic said:

enthusiasticsaver said:

This quite clearly says it is in the low to medium risk profiled portfolio but obviously only forms a percentage of the overall portfolio.  In ours it is 12% and is even present in the lowest risk but only 6% in that particular fund. No equity fund in isolation could be called cautious. 

They might argue that although constituent funds are higher risk, by diversifying over many geographical sectors and markets, they are reducing the risk to the desired levels. 

Yes exactly. Even if I were using my own DIY approach I would not pick funds all in one sector or all the one asset type or geography. The VLS 60 is obviously spread across different asset types and globally diversified. It follows that not all the funds in an IFA managed portfolio if viewed in isolation would all be at the same risk level. There are significant sums invested in bonds to bring the risk level down of the portfolio. 

Are you convinced that the bond allocation is actually bringing the risk level down? 

AnotherJoe

enthusiasticsaver said:

It is coming up to the end of the year so I normally check on investment performance around this time. 

I invested in a global multi asset passive fund of funds (Vanguard LS60) for four  years from 2015 to 2019 but for comparison I am only looking at annual performance as we have been with an IFA for just over a year now since September 2019. If we had invested in VLS60 trustnet says the annual performance was 6.4%.  According to my Fidelity performance report our annualised return  with the IFA led portfolio was 13.61% for the last 12 months invested in a cautious portfolio over 14 different funds.  This is after fees including set up fees for the first year so I am pleased with that. 

Performance varies from -5.06% for the Legal and General UK property feeder account (understandable in current situation and it was suspended anyway until October) to the Baillie Gifford American fund which has done brilliantly at 114.45% for the year.  Strategic bonds have done ok and UK funds average but emerging markets, Japan and the European ones have also done well. 

I know a lot of people on here do not like IFAs but on comparing the last years performance to what it would have done had I left it in VLS60 it seems to have done much better with the IFA than a passive tracker fund even after taking fees into account.  Am I missing anything? I know that is a crude comparison over just one year and just one multi asset fund.  I would also say I do not only use an IFA with the sole objective of improving returns.  There are other benefits. 

I wonder if there are one or two "lucky" (or clever depending on POV) funds in those 14 whose omission would cause a massive difference. eg if you took out say BG US, would it be much more mundane? (I wouldnt say that BG US is "cautious" for example)

My performance this year has been very good but i have several stellar performers. Was I good or lucky? Only 20 years time will show that.

Prism

AnotherJoe said:

enthusiasticsaver said:

It is coming up to the end of the year so I normally check on investment performance around this time. 

I invested in a global multi asset passive fund of funds (Vanguard LS60) for four  years from 2015 to 2019 but for comparison I am only looking at annual performance as we have been with an IFA for just over a year now since September 2019. If we had invested in VLS60 trustnet says the annual performance was 6.4%.  According to my Fidelity performance report our annualised return  with the IFA led portfolio was 13.61% for the last 12 months invested in a cautious portfolio over 14 different funds.  This is after fees including set up fees for the first year so I am pleased with that. 

Performance varies from -5.06% for the Legal and General UK property feeder account (understandable in current situation and it was suspended anyway until October) to the Baillie Gifford American fund which has done brilliantly at 114.45% for the year.  Strategic bonds have done ok and UK funds average but emerging markets, Japan and the European ones have also done well. 

I know a lot of people on here do not like IFAs but on comparing the last years performance to what it would have done had I left it in VLS60 it seems to have done much better with the IFA than a passive tracker fund even after taking fees into account.  Am I missing anything? I know that is a crude comparison over just one year and just one multi asset fund.  I would also say I do not only use an IFA with the sole objective of improving returns.  There are other benefits. 

I wonder if there are one or two "lucky" (or clever depending on POV) funds in those 14 whose omission would cause a massive difference. eg if you took out say BG US, would it be much more mundane? (I wouldnt say that BG US is "cautious" for example)

My performance this year has been very good but i have several stellar performers. Was I good or lucky? Only 20 years time will show that.

Isn't it how this always works though. A bunch of funds doing an ok job and hopefully 1 or 2 that do really well. The year after probably a different 1-2 fund doing all of the work. 

I don't think anyone is saying that BG US is cautious but it can work perfectly well in a cautious portfolio.

barnstar2077

Now that brexit is finally starting to get somewhere I wouldn't be surprised if the returns of the VLS 60 fund went up a bit.

I am not convinced that your IFA made portfolio is a similar risk level to the VLS 60 fund.  It will be interesting to see how they compare the next time we have a big drop.

A_T

What is the full IFA portfolio? Without seeing it it's hard to say whether the outperformance over VLS60 has been down to taking significant extra risk.

Thrugelmir

Aminatidi said:

One of the things that fascinates me is the impact that a reasonably small allocation of high performance equities can make.

Very few equities actually add value in the long term. There's a number of published research papers on the topic.