Transferring out of Defined Benefit pension

itwasntme001

Deleted_User said:

Prism said:

Deleted_User said:

dunstonh said:

zagfles said:

dunstonh said:

Has anyone actually said that? Maybe someone on my ignore list did. Bog standard global trackers have beaten VLS100, as discussed here a lot. I have. It's hardly an achievement.

VLS100 is the least effective VLS fund.  I am sure it's only there for completeness.  Although considering the large amount of money in that fund, it is clear that it appeals to some instead of a global tracker.   

The point of VLS100 is that it isn't a global tracker. Those who constantly bang on about global trackers doing better and being cheaper are missing the point. It's "active" in so far as selection of the underlying passives to use.

It is treated as a global equity fund though rather than a multi-asset fund.   But it is a global managed fund.   I bet many of those using VLS100 would refer to it as a tracker though.   It's not a very good global fund either.   Q4 in 2020, Q3 in 2019.   Even cumulatively it is Q3 over most periods.      There is nothing about VLS100 that makes it stand out against alternatives.   

Yes, the recency bias often drives people to take returns of funds with different allocations and to translate Q4 or Q3 ranking into “this is important for selecting investments”.  If you want to take issue with VLS allocation to Britain, you need to challenge their white paper on the subject rather than some meaningless numbers from 2019 and 2020. 

Here is another example... Fidelity Growth Strategies Fund (FDEGX) returned 40% in 2019 (vs 32% for the category, top quartile). It returned 30% in 2020. Not bad.  Also, it was the worst US fund for the decade ending in 2010 (67% loss).  An IFA ought to know that past performance over a couple of years does not make a fund either good or bad. 

From another point of view I am not exactly sure why anyone would recommend Vanguard Life Strategy over its peers. I certainly don't.

Its one of many reasonable options out there.  Certainly a solid choice. Why? Because it offers 
a) simplicity
b) reputable provider with trillions in assets under management 
c) better diversification than the other “fund of funds” options available in Britain
d) well justified choices for bonds (although not VLS 100) and well justified home bias.

For various reasons its not my choice but there are lots of good reasons to recommend it. 

And one of the lowest fees for a global tracker.  Fundsmith charges 1% for what is essentially a buy and hold strategy that will only work in a low rate environment.  Seems quite high for what it is.

BritishInvestor

itwasntme001 said:

dunstonh said:

Thus, a passive index tracker should form at least the core for any retail investor.

I go along with that.  Although that is because its the method I use.    Also, if you look at the propositions from firms that have active, passive and hybrid (both) you do tend to find the hybrid is the best in terms of returns.

And its not just advisable to stick to a tracker directly due to long term performance.

If that is your strategy and you want discrete mid table consistency then that is fine.   

t is to prevent adverse behaviour by retail investors that would otherwise be detrimental to returns. 

This comes down to the knowledge and understanding of the investor.  If you have a twitchy investor that moves about on a whim then they shouldn't really be near passives or managed.  They should just get in a multi-asset fund and leave the decision making well alone.

 

You are an IFA.  You would say all this.  Your opinion will always be biased about these matters.

Why would it be biased?

[Deleted User]

BritishInvestor said:

itwasntme001 said:

dunstonh said:

Thus, a passive index tracker should form at least the core for any retail investor.

I go along with that.  Although that is because its the method I use.    Also, if you look at the propositions from firms that have active, passive and hybrid (both) you do tend to find the hybrid is the best in terms of returns.

And its not just advisable to stick to a tracker directly due to long term performance.

If that is your strategy and you want discrete mid table consistency then that is fine.   

t is to prevent adverse behaviour by retail investors that would otherwise be detrimental to returns. 

This comes down to the knowledge and understanding of the investor.  If you have a twitchy investor that moves about on a whim then they shouldn't really be near passives or managed.  They should just get in a multi-asset fund and leave the decision making well alone.

 

You are an IFA.  You would say all this.  Your opinion will always be biased about these matters.

Why would it be biased?

Vanguard has caused major shifts in the investment industry. They have been instrumental in driving the prices down. While most of the products I use come from other vendors, I acknowledge the role which Vanguard played in saving me hundreds of thousands of pounds. Vanguard could pose a more direct threat to IFAs if and when it decides to move into financial advice space in the UK. 

Also, some advisers perceive themselves as investment managers (in reality this is the function of fund managers) and simple passive solutions  make the redundancy of IFAs in this space very obvious. With active funds an IFA can claim some secret superior knowledge of the fund. With an index everything is open and transparent. People using Vanguard SIPP and products are less likely to be using an IFA on an ongoing basis. 

Having said all this, there are certainly reasonable IFAs who do not slag Vanguard and focus on value added services. 

dunstonh

itwasntme001 said:

dunstonh said:

Thus, a passive index tracker should form at least the core for any retail investor.

I go along with that.  Although that is because its the method I use.    Also, if you look at the propositions from firms that have active, passive and hybrid (both) you do tend to find the hybrid is the best in terms of returns.

And its not just advisable to stick to a tracker directly due to long term performance.

If that is your strategy and you want discrete mid table consistency then that is fine.   

t is to prevent adverse behaviour by retail investors that would otherwise be detrimental to returns. 

This comes down to the knowledge and understanding of the investor.  If you have a twitchy investor that moves about on a whim then they shouldn't really be near passives or managed.  They should just get in a multi-asset fund and leave the decision making well alone.

 

You are an IFA.  You would say all this.  Your opinion will always be biased about these matters.

That makes no sense.    Why would I be biased about it?   

BritishInvestor

Deleted_User said:

BritishInvestor said:

itwasntme001 said:

dunstonh said:

Thus, a passive index tracker should form at least the core for any retail investor.

I go along with that.  Although that is because its the method I use.    Also, if you look at the propositions from firms that have active, passive and hybrid (both) you do tend to find the hybrid is the best in terms of returns.

And its not just advisable to stick to a tracker directly due to long term performance.

If that is your strategy and you want discrete mid table consistency then that is fine.   

t is to prevent adverse behaviour by retail investors that would otherwise be detrimental to returns. 

This comes down to the knowledge and understanding of the investor.  If you have a twitchy investor that moves about on a whim then they shouldn't really be near passives or managed.  They should just get in a multi-asset fund and leave the decision making well alone.

 

You are an IFA.  You would say all this.  Your opinion will always be biased about these matters.

Why would it be biased?

Vanguard has caused major shifts in the investment industry. They have been instrumental in driving the prices down. While most of the products I use come from other vendors, I acknowledge the role which Vanguard played in saving me hundreds of thousands of pounds. Vanguard could pose a more direct threat to IFAs if and when it decides to move into financial advice space in the UK. 

Also, some advisers perceive themselves as investment managers (in reality this is the function of fund managers) and simple passive solutions  make the redundancy of IFAs in this space very obvious. With active funds an IFA can claim some secret superior knowledge of the fund. With an index everything is open and transparent. People using Vanguard SIPP and products are less likely to be using an IFA on an ongoing basis. 

Having said all this, there are certainly reasonable IFAs who do not slag Vanguard and focus on value added services. 

Interesting, I know a fair number of IFAs that often use Vanguard funds (and consider Bogle a legend) as part of their portfolio, either building portfolios themselves or using the services of people like Tim Hale or Abraham Okunsanya.

I think they'd all welcome Vanguard PAS coming across the pond (no idea why it's taking so long) as they don't see it as a threat and want to see the bar raised for all offerings. 

Maybe it's a generational thing with the younger advisers focusing more on the planning side?

dunstonh

Also, some advisers perceive themselves as investment managers (in reality this is the function of fund managers) and simple passive solutions  make the redundancy of IFAs in this space very obvious.

I don't think many advisers think this.          And robos have made no dent into IFAs business whatsoever.  There is no reason to think that Vanguard's offering would be any different.

 With active funds an IFA can claim some secret superior knowledge of the fund. With an index everything is open and transparent. People using Vanguard SIPP and products are less likely to be using an IFA on an ongoing basis. 

Transparency exists on active and passive.  You just have to read the stuff.  Most don't.   People using the Vanguard SIPP are typically DIY investors and not likely to use an IFA anyway.    However, it's little different to all those that use HL.    Yet a good number of those end up with solutions costing more than what an IFA would cost.    And a good number leave HL and return to advice later.

Having said all this, there are certainly reasonable IFAs who do not slag Vanguard and focus on value added services. 

Never heard of any IFA slagging off Vanguard.   Most I know use Vanguard funds.   

Thrugelmir

itwasntme001 said:

Ask yourselves why are nearly all the common active funds held by retail investors today been around for the last 10-15 years only?  Only a handful of the common ones have been around for more than 20 years.

When were passive global equity trackers first made available to UK investors? 

Thrugelmir

Deleted_User said:

Prism said:

Deleted_User said:

dunstonh said:

zagfles said:

dunstonh said:

Has anyone actually said that? Maybe someone on my ignore list did. Bog standard global trackers have beaten VLS100, as discussed here a lot. I have. It's hardly an achievement.

VLS100 is the least effective VLS fund.  I am sure it's only there for completeness.  Although considering the large amount of money in that fund, it is clear that it appeals to some instead of a global tracker.   

The point of VLS100 is that it isn't a global tracker. Those who constantly bang on about global trackers doing better and being cheaper are missing the point. It's "active" in so far as selection of the underlying passives to use.

It is treated as a global equity fund though rather than a multi-asset fund.   But it is a global managed fund.   I bet many of those using VLS100 would refer to it as a tracker though.   It's not a very good global fund either.   Q4 in 2020, Q3 in 2019.   Even cumulatively it is Q3 over most periods.      There is nothing about VLS100 that makes it stand out against alternatives.   

Yes, the recency bias often drives people to take returns of funds with different allocations and to translate Q4 or Q3 ranking into “this is important for selecting investments”.  If you want to take issue with VLS allocation to Britain, you need to challenge their white paper on the subject rather than some meaningless numbers from 2019 and 2020. 

Here is another example... Fidelity Growth Strategies Fund (FDEGX) returned 40% in 2019 (vs 32% for the category, top quartile). It returned 30% in 2020. Not bad.  Also, it was the worst US fund for the decade ending in 2010 (67% loss).  An IFA ought to know that past performance over a couple of years does not make a fund either good or bad. 

From another point of view I am not exactly sure why anyone would recommend Vanguard Life Strategy over its peers. I certainly don't.

Its one of many reasonable options out there.  Certainly a solid choice. Why? Because it offers 
a) simplicity
b) reputable provider with trillions in assets under management 
c) better diversification than the other “fund of funds” options available in Britain
d) well justified choices for bonds (although not VLS 100) and well justified home bias.

For various reasons its not my choice but there are lots of good reasons to recommend it. 

Vanguard markets itself on the basis of a single concept that is far removed from where it begun.  Performance will determine it's future mantel. In what is a rapidly evolving market place. 

zagfles

dunstonh said:

Never heard of any IFA slagging off Vanguard.   Most I know use Vanguard funds.   

Probably more than claim "nothing can beat it"

zagfles

BritishInvestor said:

Deleted_User said:

BritishInvestor said:

itwasntme001 said:

dunstonh said:

Thus, a passive index tracker should form at least the core for any retail investor.

I go along with that.  Although that is because its the method I use.    Also, if you look at the propositions from firms that have active, passive and hybrid (both) you do tend to find the hybrid is the best in terms of returns.

And its not just advisable to stick to a tracker directly due to long term performance.

If that is your strategy and you want discrete mid table consistency then that is fine.   

t is to prevent adverse behaviour by retail investors that would otherwise be detrimental to returns. 

This comes down to the knowledge and understanding of the investor.  If you have a twitchy investor that moves about on a whim then they shouldn't really be near passives or managed.  They should just get in a multi-asset fund and leave the decision making well alone.

 

You are an IFA.  You would say all this.  Your opinion will always be biased about these matters.

Why would it be biased?

Vanguard has caused major shifts in the investment industry. They have been instrumental in driving the prices down. While most of the products I use come from other vendors, I acknowledge the role which Vanguard played in saving me hundreds of thousands of pounds. Vanguard could pose a more direct threat to IFAs if and when it decides to move into financial advice space in the UK. 

Also, some advisers perceive themselves as investment managers (in reality this is the function of fund managers) and simple passive solutions  make the redundancy of IFAs in this space very obvious. With active funds an IFA can claim some secret superior knowledge of the fund. With an index everything is open and transparent. People using Vanguard SIPP and products are less likely to be using an IFA on an ongoing basis. 

Having said all this, there are certainly reasonable IFAs who do not slag Vanguard and focus on value added services. 

Interesting, I know a fair number of IFAs that often use Vanguard funds (and consider Bogle a legend) as part of their portfolio, either building portfolios themselves or using the services of people like Tim Hale or Abraham Okunsanya.

I think they'd all welcome Vanguard PAS coming across the pond (no idea why it's taking so long) as they don't see it as a threat and want to see the bar raised for all offerings. 

Maybe it's a generational thing with the younger advisers focusing more on the planning side?

Probably more those who want to focus on the actual job of an IFA, rather than pretending to be a star fund manager with a secret recipe for better performance.