2022 Performance - SW PPP1 vs PP1 vs Vanguard LifeStrategy

bostonerimus

engagedandopen said:

dunstonh said:

The Premier version is a hybrid of active and passive.   Some consider that to be an ideal method as you can use the best of both.  

Thank you for your comment, dunstonh.  If I were going to settle for one fund, it would probably be a hybrid with ESG-tilting and smart beta on the passives.  Indeed, it is getting hard to invest without ESG tilts since it seemed suddenly to become popular last year!

I have gone through every holding in Myfolio Multi-Manager V (as of September 2022) and worked out they seem to be charging 0.49% for selecting and monitoring those underlying funds.  Am I right in thinking this is comparable to what an IFA would charge for managing a portfolio on behalf of a client, please?

There are a million ways to skin a cat and if you look back you'll always be able to see a "better" way. As crystal balls are notoriously unreliable I choose the cheapest and simplest approach.

[Deleted User]

engagedandopen said:

Deleted_User said:

Every single mutual fund is managed by definition.  Thats why each fund has a manager listed on its website. 

VLS 100 is a collection of passive funds with stable allocation and home bias.  It covers far, far more medium and small stocks than global trackers available in Britain seem cover. The cost difference between VLS and “trackers” is around 10 basis points vs circa 90 extra points British active funds seem to charge. 

I cannot think of any reputable asset manager that does not have a stable allocation.  In the case of Vanguard, they told me they review the strategic asset allocation annually.  This frequency might appeal to some, but annually seems too inflexible for me. 

In simple terms, Vanguard preserves the right to make changes (eg if China decides to  take further measures to undermine stock markets) but that’s not the intention. “Review” does not mean change. If you prefer active vs passive thats fine but there is no basis for it. The opposite is true.

I am also not keen on Vanguard's synthetic replication of an index rather than actually holding the index. 

What is your source? I know for a fact that Vanguard’s ETFs are physically replicated. Dont hold VLS100 but it makes no sense that it uses “synthetic replication”. Prepared to be proven wrong.

Finally, I prefer to support UK-based asset managers.

Sorry but this is just silly.

Your comments on VLS 100 as compared to global trackers are interesting.  It seems to me that a multi-asset risk-targeting fund of trackers uses smaller company trackers to increase volatility if the overall volatility is reaching the lower bounds; surely active management (including investment trusts) is particularly appropriate for investing in global smaller companies.

There is no conspiracy to increase volatility. Some people want to hold “whole of the market” (like me). So I hold over 4000 US stocks (thank you Vanguard) and I like it.  Others may limit themselves to 503 stocks (S&P 500).  They have more Tesla.  Doubt it helps to reduce volatility. But they are OK with only the large and a portion of mid caps. 

 While the delta could involve thousands of companies, performance gap is typically small and the effort of including international small caps is not insignificant. So there are arguments both ways. If you want active management then you shouldn’t be looking at either trackers or VLS.

[Deleted User]

engagedandopen said:

Deleted_User said:

In any given year a fraction of active funds will outperform passive.  Information is readily available.   The trick is knowing which ones are going to do it next year.  Consistent outperformance over meaningful periods of time is extremely rare.  Particularly so for funds with high costs. 

A minor issue… but you should make sure you are comparing over the exact same periods of time.   Markets can move by 3% in a day and do so quite regularly. 

For me, it comes down not to picking a winner for the next year, but rather to trusting the asset manager with the active components and making sure the costs are reasonable.  Over the long haul, I am not convinced that cheapest is always best.  Even Vanguard have started offering active funds in the UK, after all.

Yes, I am not keen on Vanguard offering active funds. Pandering to the shoppers. Trusting active managers of expensive funds is cool but the evidence is that any such trust is misplaced. You should only ever trust them to do well for themselves.

bostonerimus

Deleted_User said:

engagedandopen said:

Deleted_User said:

In any given year a fraction of active funds will outperform passive.  Information is readily available.   The trick is knowing which ones are going to do it next year.  Consistent outperformance over meaningful periods of time is extremely rare.  Particularly so for funds with high costs. 

A minor issue… but you should make sure you are comparing over the exact same periods of time.   Markets can move by 3% in a day and do so quite regularly. 

For me, it comes down not to picking a winner for the next year, but rather to trusting the asset manager with the active components and making sure the costs are reasonable.  Over the long haul, I am not convinced that cheapest is always best.  Even Vanguard have started offering active funds in the UK, after all.

Yes, I am not keen on Vanguard offering active funds. Pandering to the shoppers. Trusting active managers of expensive funds is cool but the evidence is that any such trust is misplaced. You should only ever trust them to do well for themselves.

People think they can buy success, sometimes they can and sometimes they can't. The use of active funds is mostly a psychological crutch and will not outperforming some relevant benchmark with any statistical significance.

engagedandopen

Deleted_User said:

engagedandopen said:

Deleted_User said:

In any given year a fraction of active funds will outperform passive.  Information is readily available.   The trick is knowing which ones are going to do it next year.  Consistent outperformance over meaningful periods of time is extremely rare.  Particularly so for funds with high costs. 

A minor issue… but you should make sure you are comparing over the exact same periods of time.   Markets can move by 3% in a day and do so quite regularly. 

For me, it comes down not to picking a winner for the next year, but rather to trusting the asset manager with the active components and making sure the costs are reasonable.  Over the long haul, I am not convinced that cheapest is always best.  Even Vanguard have started offering active funds in the UK, after all.

Yes, I am not keen on Vanguard offering active funds. Pandering to the shoppers. Trusting active managers of expensive funds is cool but the evidence is that any such trust is misplaced. You should only ever trust them to do well for themselves.

I disagree, especially in the absence of any specific evidence to discuss.  I am disappointed by your disrespecting my preference for supporting UK asset managers as "just silly" too, Mordko.

engagedandopen

Your comments on VLS 100 as compared to global trackers are interesting.  It seems to me that a multi-asset risk-targeting fund of trackers uses smaller company trackers to increase volatility if the overall volatility is reaching the lower bounds; surely active management (including investment trusts) is particularly appropriate for investing in global smaller companies.

"There is no conspiracy to increase volatility. Some people want to hold “whole of the market” (like me). So I hold over 4000 US stocks (thank you Vanguard) and I like it.  Others may limit themselves to 503 stocks (S&P 500).  They have more Tesla.  Doubt it helps to reduce volatility. But they are OK with only the large and a portion of mid caps."

-> Referring to a "conspiracy to increase volatility" gives the impression of not being acquainted with volatility targeted fund ranges.

engagedandopen

bostonerimus said:

engagedandopen said:

dunstonh said:

The Premier version is a hybrid of active and passive.   Some consider that to be an ideal method as you can use the best of both.  

Thank you for your comment, dunstonh.  If I were going to settle for one fund, it would probably be a hybrid with ESG-tilting and smart beta on the passives.  Indeed, it is getting hard to invest without ESG tilts since it seemed suddenly to become popular last year!

I have gone through every holding in Myfolio Multi-Manager V (as of September 2022) and worked out they seem to be charging 0.49% for selecting and monitoring those underlying funds.  Am I right in thinking this is comparable to what an IFA would charge for managing a portfolio on behalf of a client, please?

There are a million ways to skin a cat and if you look back you'll always be able to see a "better" way. As crystal balls are notoriously unreliable I choose the cheapest and simplest approach.

With all respect, bostonerimus, this question was for dunstonh and no reference was made to crystal balls.

engagedandopen

bostonerimus said:

Deleted_User said:

engagedandopen said:

Deleted_User said:

In any given year a fraction of active funds will outperform passive.  Information is readily available.   The trick is knowing which ones are going to do it next year.  Consistent outperformance over meaningful periods of time is extremely rare.  Particularly so for funds with high costs. 

A minor issue… but you should make sure you are comparing over the exact same periods of time.   Markets can move by 3% in a day and do so quite regularly. 

For me, it comes down not to picking a winner for the next year, but rather to trusting the asset manager with the active components and making sure the costs are reasonable.  Over the long haul, I am not convinced that cheapest is always best.  Even Vanguard have started offering active funds in the UK, after all.

Yes, I am not keen on Vanguard offering active funds. Pandering to the shoppers. Trusting active managers of expensive funds is cool but the evidence is that any such trust is misplaced. You should only ever trust them to do well for themselves.

People think they can buy success, sometimes they can and sometimes they can't. The use of active funds is mostly a psychological crutch and will not outperforming some relevant benchmark with any statistical significance.

What evidence led you to that opinion?

bostonerimus

engagedandopen said:

bostonerimus said:

engagedandopen said:

dunstonh said:

The Premier version is a hybrid of active and passive.   Some consider that to be an ideal method as you can use the best of both.  

Thank you for your comment, dunstonh.  If I were going to settle for one fund, it would probably be a hybrid with ESG-tilting and smart beta on the passives.  Indeed, it is getting hard to invest without ESG tilts since it seemed suddenly to become popular last year!

I have gone through every holding in Myfolio Multi-Manager V (as of September 2022) and worked out they seem to be charging 0.49% for selecting and monitoring those underlying funds.  Am I right in thinking this is comparable to what an IFA would charge for managing a portfolio on behalf of a client, please?

There are a million ways to skin a cat and if you look back you'll always be able to see a "better" way. As crystal balls are notoriously unreliable I choose the cheapest and simplest approach.

With all respect, bostonerimus, this question was for dunstonh and no reference was made to crystal balls.

When you post to an open forum you have to expect everyone to join in.

[Deleted User]

Your comments on VLS 100 as compared to global trackers are interesting.  It seems to me that a multi-asset risk-targeting fund of trackers uses smaller company trackers to increase volatility

Referring to a "conspiracy to increase volatility" gives the impression of not being acquainted with volatility targeted fund ranges.

You lost me completely. What has that got to do with either VLS or global trackers? VLS does not use “smaller company trackers” whatever it is. It uses “whole of the market” funds. Nor does it try to increase volatility. Makes zero sense. If you think that VLS would use leverage to increase volatility (which is what target volatility means), then you should read one-paragraph description of fund’s objectives. 

 Back to your claim that VLS100 is a synthetic fund. Reference would be appreciated.