Index or wealth preservation for investments over unknown period of time?

Apodemus

Having recently taken personal control of my SIPP and invested it for myself, I found it useful to back-test the components on how they would have performed during the Feb/Mar '20 Covid drop in the market.  My "preservation" grouping dropped about 20%, where my "income" group dropped 27% and my  "growth" group dropped 46%.   I also have a group that is designed as an emergency group to sell-down in the event that I need to give the rest of the portfolio time to recover from a market crash and it only dropped by 3% across that period.   Of course the next market drop will be different, but this exercise has given me some hope that the structure might meet my plan for it. 

For the record, across that month, PNL dropped 12%, CGT 15%, while Ruffer rose 5% and my Gilts rose 4%.

aroominyork

Apodemus said:

For the record, across that month, PNL dropped 12%, CGT 15%, while Ruffer rose 5% and my Gilts rose 4%.

Did the timing coincide with Bitcoin's price rise during Ruffer's dabble in it?

talexuser

Very good point. Ruffer was not doing particularly well, I swapped it some time ago, and the Bitcoin bet is not the sort of thing I want my "safe" fund to be doing, even if it worked out ok, it could just as well have been a disaster. Leave that to my high risk choices, if at all appropriate.

Apodemus

aroominyork said:

Apodemus said:

For the record, across that month, PNL dropped 12%, CGT 15%, while Ruffer rose 5% and my Gilts rose 4%.

Did the timing coincide with Bitcoin's price rise during Ruffer's dabble in it?

I don't think so - I remember reading about it in one of the Ruffer updates, so it must have been after I bought the stock.  My recollection is that the bitcoin purchase was a very small proportion of the total fund. 

On a total return basis, I am currently sitting on gains of 26% on Ruffer, having held for just over a year. Comparable figures for PNL and CGT are 11% and 13%.  

masonic

aroominyork said:

I don’t contest any of that, masonic. I am not questioning the objectives of the fund or whether the asset mix is right to achieve those objectives; I do not have the experience to do that. What I looked at was whether, over a few years, the fund selection would outperform index funds in the approximate asset mix that CGT was using.

Understood. Yes I agree the active management does not give sufficient premium that someone could hold this fund and the more defensively positioned assets within each class while still achieving the average performance of each index.

MarkCarnage

Ruffer was not doing particularly well, I swapped it some time ago, and the Bitcoin bet is not the sort of thing I want my "safe" fund to be doing, even if it worked out ok, it could just as well have been a disaster.

Agreed. I was astonished that they thought it appropriate to buy Bitcoin for that type of fund. Told them so. Not sure if I can claim credit for them selling it, but I think that they got more than just me complaining......

aroominyork

masonic said:

masonic said:

aroominyork said:

I don’t contest any of that, masonic. I am not questioning the objectives of the fund or whether the asset mix is right to achieve those objectives; I do not have the experience to do that. What I looked at was whether, over a few years, the fund selection would outperform index funds in the approximate asset mix that CGT was using.

Understood. Yes I agree the active management does not give sufficient premium that someone could hold this fund and the more defensively positioned assets within each class while still achieving the average performance of each index.

That said, looking again the first half of the noughties it is mighty impressive performance by CGT if it was similarly positioned with 25-40% equities, c.30% linkers and the rest in regular bonds. The thing that was riling me was how funds choose marketing terms which suggest they have discovered a magic new way of investing, when they are just choosing a different mix of what is available to the rest of the world. Take wealth preservation funds. I would describe CGT as a low/medium risk dynamically-adjusted multi-asset fund that holds a lot of linkers. Buy VLS40/60 and top it up with a linker index fund - it might perform the same for a lower fee.

Linton

aroominyork said:

masonic said:

masonic said:

aroominyork said:

I don’t contest any of that, masonic. I am not questioning the objectives of the fund or whether the asset mix is right to achieve those objectives; I do not have the experience to do that. What I looked at was whether, over a few years, the fund selection would outperform index funds in the approximate asset mix that CGT was using.

Understood. Yes I agree the active management does not give sufficient premium that someone could hold this fund and the more defensively positioned assets within each class while still achieving the average performance of each index.

That said, looking again the first half of the noughties it is mighty impressive performance by CGT if it was similarly positioned with 25-40% equities, c.30% linkers and the rest in regular bonds. The thing that was riling me was how funds choose marketing terms which suggest they have discovered a magic new way of investing, when they are just choosing a different mix of what is available to the rest of the world. Take wealth preservation funds. I would describe CGT as a low/medium risk-adjusted multi-asset fund that holds a lot of linkers. Buy VLS40/60 and top it up with a linker index fund - it might perform the same for a lower fee.

Err yes that is all investing is, choosing the right mix of investments that are (mostly) available to the rest of the world at the right time.  Easy really, why doesnt everyone get it right?  Rather like painting a portrait is merely getting the right mix of readily available pigments in the right place.  Of course CGT would not be using the same mix in the 2000s pre Great Crash. Circumstances were very different with bond interest rates well above inflation - why have a large holding of inflation linked funds?  That is one reason why someone for whom medium term protection is important would buy CGT rather than VLS40 + a hotch-potch of random inflation tracking index funds.