Investing in Global Trackers and other similar investments

CheekyMikey

As I said, I’m out, so I’ll leave it to others to debate the merits with you…all I’ll add is that if you’re more comfortable with funds than ITs, the CG Absolute Return fund is essentially the same as CGT with near identical returns. Good luck.

ColdIron

DoneWorking said:

CheekyMikey said:

Alistair31 said:

I’m surprised it took so long. CGT and done.  

(+ keeping in cash what is needed in the short term for car, roof etc)

It didn’t take so long…it’s been suggested to the OP a few times already, twice by me at least. As you can see, the OP doesn’t appear to be one to want to research suggestions. Seem to have gone full circle now, which I guess is what happens eventually when the same question keeps being asked…I put my final tuppence worth in earlier and as they say in DD, I’m out

While I try to catch up can you at least outline why you think CGT is a better option than the Vanguard option

Use the search function, it has been discussed over and over in the past on this board

GeoffTF

DoneWorking said:

Bobziz said:

Apologies if already suggested, but wouldn't CGT meet the OP's needs ? Low volatility, a focus on protecting against inflation, a better ESG score than the category average and has provided positive returns in 39 out of the last 40 years.

What are CGT ?

The Vanguard option is the mainstream choice. $7.5 trillion vs £1 billion. The Vanguard fund is a global tracker. CGT is an actively managed fund. Over any reasonable period of time, a low cost tracker beats most managed funds. The longer the period of time the greater the proportion of managed funds that are beaten. Nobody has come up with a way of picking the rare managed funds that will beat the tracker with better than a chance rate of success.

https://www.spglobal.com/spdji/en/documents/spiva/spiva-us-year-end-2020.pdf

eskbanker

GeoffTF said:

The Vanguard option is the mainstream choice. $7.5 trillion vs £1 billion. The Vanguard fund is a global tracker. CGT is an actively managed fund. Over any reasonable period of time, a low cost tracker beats most managed funds. The longer the period of time the greater the proportion of managed funds that are beaten. Nobody has come up with a way of picking the rare managed funds that will beat the tracker with better than a chance rate of success.

In terms of products 'beating' each other, surely much depends on objectives?  In terms of the active v passive argument that's done to death on other threads, the comment usually seems to refer to outperformance in terms of absolute return, but for those (like OP) primarily aiming only to beat inflation rather than shooting the lights out with sustainable double-digit growth, is there any evidence that funds managed specifically for wealth preservation are less likely to succeed than something more generalised, such as an index tracker?

GeoffTF

eskbanker said:

GeoffTF said:

The Vanguard option is the mainstream choice. $7.5 trillion vs £1 billion. The Vanguard fund is a global tracker. CGT is an actively managed fund. Over any reasonable period of time, a low cost tracker beats most managed funds. The longer the period of time the greater the proportion of managed funds that are beaten. Nobody has come up with a way of picking the rare managed funds that will beat the tracker with better than a chance rate of success.

In terms of products 'beating' each other, surely much depends on objectives?  In terms of the active v passive argument that's done to death on other threads, the comment usually seems to refer to outperformance in terms of absolute return, but for those (like OP) primarily aiming only to beat inflation rather than shooting the lights out with sustainable double-digit growth, is there any evidence that funds managed specifically for wealth preservation are less likely to succeed than something more generalised, such as an index tracker?

Financial theory says no. We are talking about a tracker for the equity part of the portfolio. If you try to pick only defensive stocks, you reduce your diversification, and increase your risk. As I have said, gilts will give a lower return than savings accounts (particularly after tax). Index linked gilts? Currently, you in effect pay about a third of your money to have the remainder index linked after 10 years. Bonds linked to inflation in other countries are similarly unattractive too. CGT does not have any magic investments that it can buy that are unavailable to everyone else.

eskbanker

GeoffTF said:

eskbanker said:

GeoffTF said:

The Vanguard option is the mainstream choice. $7.5 trillion vs £1 billion. The Vanguard fund is a global tracker. CGT is an actively managed fund. Over any reasonable period of time, a low cost tracker beats most managed funds. The longer the period of time the greater the proportion of managed funds that are beaten. Nobody has come up with a way of picking the rare managed funds that will beat the tracker with better than a chance rate of success.

In terms of products 'beating' each other, surely much depends on objectives?  In terms of the active v passive argument that's done to death on other threads, the comment usually seems to refer to outperformance in terms of absolute return, but for those (like OP) primarily aiming only to beat inflation rather than shooting the lights out with sustainable double-digit growth, is there any evidence that funds managed specifically for wealth preservation are less likely to succeed than something more generalised, such as an index tracker?

Financial theory says no. We are talking about a tracker for the equity part of the portfolio. If you try to pick only defensive stocks, you reduce your diversification, and increase your risk. As I have said, gilts will give a lower return than savings accounts (particularly after tax). Index linked gilts? Currently, you in effect pay about a third of your money to have the remainder index linked after 10 years. Bonds linked to inflation in other countries are similarly unattractive too. CGT does not have any magic investments that it can buy that are unavailable to everyone else.

But my point is that it's misleading to paint the Vanguard fund as superior to CGT simply on the basis that it's passive rather active - I'm not asserting that CGT has any magic or unique investments but just that it's managed with a specific objective in mind, so if that's compatible with the investor's objective, then it's not all about a comparison based solely on scale of returns, if lower volatility/risk is desirable.  Horses for courses....

GeoffTF

eskbanker said:

GeoffTF said:

eskbanker said:

GeoffTF said:

The Vanguard option is the mainstream choice. $7.5 trillion vs £1 billion. The Vanguard fund is a global tracker. CGT is an actively managed fund. Over any reasonable period of time, a low cost tracker beats most managed funds. The longer the period of time the greater the proportion of managed funds that are beaten. Nobody has come up with a way of picking the rare managed funds that will beat the tracker with better than a chance rate of success.

In terms of products 'beating' each other, surely much depends on objectives?  In terms of the active v passive argument that's done to death on other threads, the comment usually seems to refer to outperformance in terms of absolute return, but for those (like OP) primarily aiming only to beat inflation rather than shooting the lights out with sustainable double-digit growth, is there any evidence that funds managed specifically for wealth preservation are less likely to succeed than something more generalised, such as an index tracker?

Financial theory says no. We are talking about a tracker for the equity part of the portfolio. If you try to pick only defensive stocks, you reduce your diversification, and increase your risk. As I have said, gilts will give a lower return than savings accounts (particularly after tax). Index linked gilts? Currently, you in effect pay about a third of your money to have the remainder index linked after 10 years. Bonds linked to inflation in other countries are similarly unattractive too. CGT does not have any magic investments that it can buy that are unavailable to everyone else.

But my point is that it's misleading to paint the Vanguard fund as superior to CGT simply on the basis that it's passive rather active - I'm not asserting that CGT has any magic or unique investments but just that it's managed with a specific objective in mind, so if that's compatible with the investor's objective, then it's not all about a comparison based solely on scale of returns, if lower volatility/risk is desirable.  Horses for courses....

If you want lower volatility/risk you hold more cash/bonds. This is just the old Modern Portfolio Theory stuff of the 1960s. I have suggested 50% equities, but clearly the OP could go with less.

eskbanker

GeoffTF said:

eskbanker said:

GeoffTF said:

eskbanker said:

GeoffTF said:

The Vanguard option is the mainstream choice. $7.5 trillion vs £1 billion. The Vanguard fund is a global tracker. CGT is an actively managed fund. Over any reasonable period of time, a low cost tracker beats most managed funds. The longer the period of time the greater the proportion of managed funds that are beaten. Nobody has come up with a way of picking the rare managed funds that will beat the tracker with better than a chance rate of success.

In terms of products 'beating' each other, surely much depends on objectives?  In terms of the active v passive argument that's done to death on other threads, the comment usually seems to refer to outperformance in terms of absolute return, but for those (like OP) primarily aiming only to beat inflation rather than shooting the lights out with sustainable double-digit growth, is there any evidence that funds managed specifically for wealth preservation are less likely to succeed than something more generalised, such as an index tracker?

Financial theory says no. We are talking about a tracker for the equity part of the portfolio. If you try to pick only defensive stocks, you reduce your diversification, and increase your risk. As I have said, gilts will give a lower return than savings accounts (particularly after tax). Index linked gilts? Currently, you in effect pay about a third of your money to have the remainder index linked after 10 years. Bonds linked to inflation in other countries are similarly unattractive too. CGT does not have any magic investments that it can buy that are unavailable to everyone else.

But my point is that it's misleading to paint the Vanguard fund as superior to CGT simply on the basis that it's passive rather active - I'm not asserting that CGT has any magic or unique investments but just that it's managed with a specific objective in mind, so if that's compatible with the investor's objective, then it's not all about a comparison based solely on scale of returns, if lower volatility/risk is desirable.  Horses for courses....

If you want lower volatility/risk you hold more cash/bonds. This is just the old Modern Portfolio Theory stuff of the 1960s. I have suggested 50% equities, but clearly the OP could go with less.

We seem to be at cross purposes - your post at the start of this exchange appears to be advocating passives over actives as a point of principle, so I was highlighting that this may not apply across the board but depends on objectives.  The fact that a portfolio can include some less volatile assets to complement a passive equity tracker doesn't actually mean that this is necessarily a better option than a WP product, especially for those (such as OP) seeking simplicity!

GeoffTF

eskbanker said:

GeoffTF said:

eskbanker said:

GeoffTF said:

eskbanker said:

GeoffTF said:

The Vanguard option is the mainstream choice. $7.5 trillion vs £1 billion. The Vanguard fund is a global tracker. CGT is an actively managed fund. Over any reasonable period of time, a low cost tracker beats most managed funds. The longer the period of time the greater the proportion of managed funds that are beaten. Nobody has come up with a way of picking the rare managed funds that will beat the tracker with better than a chance rate of success.

In terms of products 'beating' each other, surely much depends on objectives?  In terms of the active v passive argument that's done to death on other threads, the comment usually seems to refer to outperformance in terms of absolute return, but for those (like OP) primarily aiming only to beat inflation rather than shooting the lights out with sustainable double-digit growth, is there any evidence that funds managed specifically for wealth preservation are less likely to succeed than something more generalised, such as an index tracker?

Financial theory says no. We are talking about a tracker for the equity part of the portfolio. If you try to pick only defensive stocks, you reduce your diversification, and increase your risk. As I have said, gilts will give a lower return than savings accounts (particularly after tax). Index linked gilts? Currently, you in effect pay about a third of your money to have the remainder index linked after 10 years. Bonds linked to inflation in other countries are similarly unattractive too. CGT does not have any magic investments that it can buy that are unavailable to everyone else.

But my point is that it's misleading to paint the Vanguard fund as superior to CGT simply on the basis that it's passive rather active - I'm not asserting that CGT has any magic or unique investments but just that it's managed with a specific objective in mind, so if that's compatible with the investor's objective, then it's not all about a comparison based solely on scale of returns, if lower volatility/risk is desirable.  Horses for courses....

If you want lower volatility/risk you hold more cash/bonds. This is just the old Modern Portfolio Theory stuff of the 1960s. I have suggested 50% equities, but clearly the OP could go with less.

We seem to be at cross purposes - your post at the start of this exchange appears to be advocating passives over actives as a point of principle, so I was highlighting that this may not apply across the board but depends on objectives.  The fact that a portfolio can include some less volatile assets to complement a passive equity tracker doesn't actually mean that this is necessarily a better option than a WP product, especially for those (such as OP) seeking simplicity!

It has been proposed that he holds non-volatile assets anyway. If he believes that a global tracker is going to be more volatile than an actively managed fund of defensive stocks, he can hold a little more of those non-volatile assets. There is no extra management overhead in that.

It does not make much sense to me to pay active management costs to hold a chunk of low risk government bonds. There is virtually no scope for value added there. (Paying IFA costs to hold government bonds makes even less sense.)

We have discussed the Vanguard SustainableLife option too. If he wants a single investment he can use that. It is still cheaper than CGT, and much cheaper than using an IFA. In a low return environment, it is very important to keep costs to a minimum.

DoneWorking

GeoffTF said:

eskbanker said:

GeoffTF said:

eskbanker said:

GeoffTF said:

eskbanker said:

GeoffTF said:

The Vanguard option is the mainstream choice. $7.5 trillion vs £1 billion. The Vanguard fund is a global tracker. CGT is an actively managed fund. Over any reasonable period of time, a low cost tracker beats most managed funds. The longer the period of time the greater the proportion of managed funds that are beaten. Nobody has come up with a way of picking the rare managed funds that will beat the tracker with better than a chance rate of success.

In terms of products 'beating' each other, surely much depends on objectives?  In terms of the active v passive argument that's done to death on other threads, the comment usually seems to refer to outperformance in terms of absolute return, but for those (like OP) primarily aiming only to beat inflation rather than shooting the lights out with sustainable double-digit growth, is there any evidence that funds managed specifically for wealth preservation are less likely to succeed than something more generalised, such as an index tracker?

Financial theory says no. We are talking about a tracker for the equity part of the portfolio. If you try to pick only defensive stocks, you reduce your diversification, and increase your risk. As I have said, gilts will give a lower return than savings accounts (particularly after tax). Index linked gilts? Currently, you in effect pay about a third of your money to have the remainder index linked after 10 years. Bonds linked to inflation in other countries are similarly unattractive too. CGT does not have any magic investments that it can buy that are unavailable to everyone else.

But my point is that it's misleading to paint the Vanguard fund as superior to CGT simply on the basis that it's passive rather active - I'm not asserting that CGT has any magic or unique investments but just that it's managed with a specific objective in mind, so if that's compatible with the investor's objective, then it's not all about a comparison based solely on scale of returns, if lower volatility/risk is desirable.  Horses for courses....

If you want lower volatility/risk you hold more cash/bonds. This is just the old Modern Portfolio Theory stuff of the 1960s. I have suggested 50% equities, but clearly the OP could go with less.

We seem to be at cross purposes - your post at the start of this exchange appears to be advocating passives over actives as a point of principle, so I was highlighting that this may not apply across the board but depends on objectives.  The fact that a portfolio can include some less volatile assets to complement a passive equity tracker doesn't actually mean that this is necessarily a better option than a WP product, especially for those (such as OP) seeking simplicity!

It has been proposed that he holds non-volatile assets anyway. If he believes that a global tracker is going to be more volatile than an actively managed fund of defensive stocks, he can hold a little more of those non-volatile assets. There is no extra management overhead in that.

It does not make much sense to me to pay active management costs to hold a chunk of low risk government bonds. There is virtually no scope for value added there. (Paying IFA costs to hold government bonds makes even less sense.)

We have discussed the Vanguard SustainableLife option too. If he wants a single investment he can use that. It is still cheaper than CGT, and much cheaper than using an IFA. In a low return environment, it is very important to keep costs to a minimum.

What are the approximate returns after fees/costs
IFA Route %?
DIY With VG SustainableLife %?
DIY With other VG Option %?

For VG Options add in any anticipated return from savings interest