How to properly review your investments?

bowlhead99

TheLittleSaver said:

I am writing the question again, before it gets covered by other comments.

@darkidoe

I've downloaded the spreadsheet you suggested, but when I change the dates it gets crazy, gives me a lot of errors/missing elements (in the "Missing+ Extra" columns) and the dates disappear? Did you experience this too the first time nad how do you solve it, please?

If anyone else knows how to fix this, that would be much appreciated.

Thanks

  I haven't used the sheet myself, but if you're getting some sort of a problem from changing dates in their template, is it perhaps because their dates (as Americans) are in typical US format (month date year) while you have keyed in date month year?

 For example 3/1/2021 means 3 Jan to you but 1 March to them (a date which hasn't happened yet) and while 10/10/2020 is the same in both languages, 31/3/2020 is not a valid date due to there not being thirty-one months in 2020.

BananaRepublic

eskbanker said:

BananaRepublic said:

Many people here rebalance. If a fund shows a large growth, they sell some units and buy other funds on the grounds that large gains are unlikely to continue, a form of taking profits.

That's not typically the rationale for rebalancing though, which is more about returning a portfolio to a target allocation than taking a view about sustainability of differential performance....

Quite right, rebalancing ensures that the desired exposure to risk is maintained. However, you could argue that you should maintain a fixed proportion of each area eg US, until you think the relative risks have changed. 

BananaRepublic

thegentleway said:

Prism said:

thegentleway said:

That’s not how rebalancing works. E.g. you rebalance when different asset classes have performed differently and you’re not at your target allocation. There’s is no rebalancing to do on a single global fund. It’s already “balanced” by the market!
You’re convinced US allocation is disproportionate and you’re welcomed to bet against the market if you want but a passive investor does not make these active decisions. They are not trying to beat the market like you are.

There are a number of views on what a passive investor is. One is that they use index trackers but not necessarily a single global fund. I know of plenty of people who only invest in an S&P 500 tracker but would call themselves passive investors. A global tracker fund is simply another choice of fund and even then there are lots of alternates like the differences between FTSE and MCSI or decisions on large cap vs all cap.

Fair enough but it sounds like they've actively picked the S&P500 (over global) but are following it passively
Do they "rebalance" their index when a certain sector does well? That's what @BananaRepublic is suggesting

I’m not saying someone should do something specific, but I’m a bit surprised at the prevalent view that a global tracker is as safe as houses, the gold standard, perfect for a large sum etc. 

An investor could maintain a portfolio of index funds, each covering the US, UK, Europe, and Asia for example, and then rebalance each year. 

thegentleway

BananaRepublic said:

thegentleway said:

Prism said:

thegentleway said:

That’s not how rebalancing works. E.g. you rebalance when different asset classes have performed differently and you’re not at your target allocation. There’s is no rebalancing to do on a single global fund. It’s already “balanced” by the market!
You’re convinced US allocation is disproportionate and you’re welcomed to bet against the market if you want but a passive investor does not make these active decisions. They are not trying to beat the market like you are.

There are a number of views on what a passive investor is. One is that they use index trackers but not necessarily a single global fund. I know of plenty of people who only invest in an S&P 500 tracker but would call themselves passive investors. A global tracker fund is simply another choice of fund and even then there are lots of alternates like the differences between FTSE and MCSI or decisions on large cap vs all cap.

Fair enough but it sounds like they've actively picked the S&P500 (over global) but are following it passively
Do they "rebalance" their index when a certain sector does well? That's what @BananaRepublic is suggesting

I’m not saying someone should do something specific, but I’m a bit surprised at the prevalent view that a global tracker is as safe as houses, the gold standard, perfect for a large sum etc. 

An investor could maintain a portfolio of index funds, each covering the US, UK, Europe, and Asia for example, and then rebalance each year. 

It’s not as safe as houses (equities are volatile) but it’s less risky than active investing because you are adding the judgement call of fund managers or yourself if you DIY.

Rebalance to what? What is the rationale for the specific geographic allocation you have picked? The default is market cap. Anything else is adding weight to certain geographical areas because of something you know the market doesn’t.

BananaRepublic

JohnWinder said:

I do see the temptation, or even wisdom of 'taking profits' after large gains. It's an active management strategy, not a passive, market following strategy. Each year the evidence keeps rolling in that only a minority of the smartest, best resourced fund managers on the planet can stay ahead of an index fund over periods exceeding about 5-10 years, so why don't these easy wins result in better returns? Of course, the amateurs could be doing better; they're not systematically measured, so we don't know. But I doubt it.

Yes, research does indeed show that on average active funds underperform. However, that doesn’t mean that active funds should be ignored, as many people suggest. 

My experience is that it is possible to choose active funds that perform well in the long term. 20 years ago I was keen on passive funds, having read lots of reports by financial journalists. I ended up selling them as they were outperformed by my active funds. I now have mostly active funds and some of them have been doing very nicely for twenty years. I have passive US funds, and I don’t think there is a reason to hold active US funds, though I could be wrong. I’ve only ever had one dog, and that was due to investing in Japan 20 years ago, when the predicted recovery fizzled out. The mistake was the choice of market. 

A good reason to have active funds is that not all markets and sectors have passive funds, so if you want exposure to them, you have no choice. 

Of course the big problem with an active fund is that it might start underperforming, as evidenced by Neil Woodford’s sorry saga. For the inexperienced investor, the passive route is undoubtedly less risky. 

TheLittleSaver

bowlhead99 said:

  I haven't used the sheet myself, but if you're getting some sort of a problem from changing dates in their template, is it perhaps because their dates (as Americans) are in typical US format (month date year) while you have keyed in date month year?

 For example 3/1/2021 means 3 Jan to you but 1 March to them (a date which hasn't happened yet) and while 10/10/2020 is the same in both languages, 31/3/2020 is not a valid date due to there not being thirty-one months in 2020.

Thanks @b@bowlhead99 for the reply, but I don't think that's the problem, as there is a specific part in the form where you specify "year" and "month" of when your investment starts, then the system SHOULD change everything else accordingly. Very straightforward in principle, but it doesn't work (creating those issues I'm talking about).

NottinghamKnight

thegentleway said:

BananaRepublic said:

thegentleway said:

Prism said:

thegentleway said:

That’s not how rebalancing works. E.g. you rebalance when different asset classes have performed differently and you’re not at your target allocation. There’s is no rebalancing to do on a single global fund. It’s already “balanced” by the market!
You’re convinced US allocation is disproportionate and you’re welcomed to bet against the market if you want but a passive investor does not make these active decisions. They are not trying to beat the market like you are.

There are a number of views on what a passive investor is. One is that they use index trackers but not necessarily a single global fund. I know of plenty of people who only invest in an S&P 500 tracker but would call themselves passive investors. A global tracker fund is simply another choice of fund and even then there are lots of alternates like the differences between FTSE and MCSI or decisions on large cap vs all cap.

Fair enough but it sounds like they've actively picked the S&P500 (over global) but are following it passively
Do they "rebalance" their index when a certain sector does well? That's what @BananaRepublic is suggesting

I’m not saying someone should do something specific, but I’m a bit surprised at the prevalent view that a global tracker is as safe as houses, the gold standard, perfect for a large sum etc. 

An investor could maintain a portfolio of index funds, each covering the US, UK, Europe, and Asia for example, and then rebalance each year. 

It’s not as safe as houses (equities are volatile) but it’s less risky than active investing because you are adding the judgement call of fund managers or yourself if you DIY.

Rebalance to what? What is the rationale for the specific geographic allocation you have picked? The default is market cap. Anything else is adding weight to certain geographical areas because of something you know the market doesn’t.

Nothing is really passive there are active choices in any portfolio. You might choose an all world tracker, but the bond markets are far bigger than equity markets so in being truly passive then a very large government bond holding would be a key part. 

thegentleway

NottinghamKnight said:

thegentleway said:

BananaRepublic said:

thegentleway said:

Prism said:

thegentleway said:

That’s not how rebalancing works. E.g. you rebalance when different asset classes have performed differently and you’re not at your target allocation. There’s is no rebalancing to do on a single global fund. It’s already “balanced” by the market!
You’re convinced US allocation is disproportionate and you’re welcomed to bet against the market if you want but a passive investor does not make these active decisions. They are not trying to beat the market like you are.

There are a number of views on what a passive investor is. One is that they use index trackers but not necessarily a single global fund. I know of plenty of people who only invest in an S&P 500 tracker but would call themselves passive investors. A global tracker fund is simply another choice of fund and even then there are lots of alternates like the differences between FTSE and MCSI or decisions on large cap vs all cap.

Fair enough but it sounds like they've actively picked the S&P500 (over global) but are following it passively
Do they "rebalance" their index when a certain sector does well? That's what @BananaRepublic is suggesting

I’m not saying someone should do something specific, but I’m a bit surprised at the prevalent view that a global tracker is as safe as houses, the gold standard, perfect for a large sum etc. 

An investor could maintain a portfolio of index funds, each covering the US, UK, Europe, and Asia for example, and then rebalance each year. 

It’s not as safe as houses (equities are volatile) but it’s less risky than active investing because you are adding the judgement call of fund managers or yourself if you DIY.

Rebalance to what? What is the rationale for the specific geographic allocation you have picked? The default is market cap. Anything else is adding weight to certain geographical areas because of something you know the market doesn’t.

Nothing is really passive there are active choices in any portfolio. You might choose an all world tracker, but the bond markets are far bigger than equity markets so in being truly passive then a very large government bond holding would be a key part. 

Getting silly now. Equities/bond allocation is based on risk appetite, etc... not market cap.

NottinghamKnight

thegentleway said:

NottinghamKnight said:

thegentleway said:

BananaRepublic said:

thegentleway said:

Prism said:

thegentleway said:

That’s not how rebalancing works. E.g. you rebalance when different asset classes have performed differently and you’re not at your target allocation. There’s is no rebalancing to do on a single global fund. It’s already “balanced” by the market!
You’re convinced US allocation is disproportionate and you’re welcomed to bet against the market if you want but a passive investor does not make these active decisions. They are not trying to beat the market like you are.

There are a number of views on what a passive investor is. One is that they use index trackers but not necessarily a single global fund. I know of plenty of people who only invest in an S&P 500 tracker but would call themselves passive investors. A global tracker fund is simply another choice of fund and even then there are lots of alternates like the differences between FTSE and MCSI or decisions on large cap vs all cap.

Fair enough but it sounds like they've actively picked the S&P500 (over global) but are following it passively
Do they "rebalance" their index when a certain sector does well? That's what @BananaRepublic is suggesting

I’m not saying someone should do something specific, but I’m a bit surprised at the prevalent view that a global tracker is as safe as houses, the gold standard, perfect for a large sum etc. 

An investor could maintain a portfolio of index funds, each covering the US, UK, Europe, and Asia for example, and then rebalance each year. 

It’s not as safe as houses (equities are volatile) but it’s less risky than active investing because you are adding the judgement call of fund managers or yourself if you DIY.

Rebalance to what? What is the rationale for the specific geographic allocation you have picked? The default is market cap. Anything else is adding weight to certain geographical areas because of something you know the market doesn’t.

Nothing is really passive there are active choices in any portfolio. You might choose an all world tracker, but the bond markets are far bigger than equity markets so in being truly passive then a very large government bond holding would be a key part. 

Getting silly now. Equities/bond allocation is based on risk appetite, etc... not market cap.

Not at all, it's very silly to say something is wholly passive.

thegentleway

NottinghamKnight said:

thegentleway said:

NottinghamKnight said:

thegentleway said:

BananaRepublic said:

thegentleway said:

Prism said:

thegentleway said:

That’s not how rebalancing works. E.g. you rebalance when different asset classes have performed differently and you’re not at your target allocation. There’s is no rebalancing to do on a single global fund. It’s already “balanced” by the market!
You’re convinced US allocation is disproportionate and you’re welcomed to bet against the market if you want but a passive investor does not make these active decisions. They are not trying to beat the market like you are.

There are a number of views on what a passive investor is. One is that they use index trackers but not necessarily a single global fund. I know of plenty of people who only invest in an S&P 500 tracker but would call themselves passive investors. A global tracker fund is simply another choice of fund and even then there are lots of alternates like the differences between FTSE and MCSI or decisions on large cap vs all cap.

Fair enough but it sounds like they've actively picked the S&P500 (over global) but are following it passively
Do they "rebalance" their index when a certain sector does well? That's what @BananaRepublic is suggesting

I’m not saying someone should do something specific, but I’m a bit surprised at the prevalent view that a global tracker is as safe as houses, the gold standard, perfect for a large sum etc. 

An investor could maintain a portfolio of index funds, each covering the US, UK, Europe, and Asia for example, and then rebalance each year. 

It’s not as safe as houses (equities are volatile) but it’s less risky than active investing because you are adding the judgement call of fund managers or yourself if you DIY.

Rebalance to what? What is the rationale for the specific geographic allocation you have picked? The default is market cap. Anything else is adding weight to certain geographical areas because of something you know the market doesn’t.

Nothing is really passive there are active choices in any portfolio. You might choose an all world tracker, but the bond markets are far bigger than equity markets so in being truly passive then a very large government bond holding would be a key part. 

Getting silly now. Equities/bond allocation is based on risk appetite, etc... not market cap.

Not at all, it's very silly to say something is wholly passive.

I don’t think it said that? Anyway, for clarity, I’m just saying that the default for passive investing in equities is a global index tracker.