Anything better than BlackRock Consensus 100 available at the moment

GeoffTF

dunstonh said:

Some same group of people in this MSE do not like if there is reminder again what these proven billionaires investors have been saying so I suggest you search from previous posts.

A lot of the often quoted billionaire investors tell people to do things differently to how they did it.  Buffett doesn't invest how he told a room full of Americans how his wife should invest if he was dead.

The OP will find out what the IFA's opinion is worth if he asks him to guarantee compensation if his recommendation under performs LifeStrategy 100.

The IFA is not an investment manager.    All the IFA is responsible for is selecting the asset allocation and the funds to use to achieve that.     Most of that data comes from third parties and is bought in.  The primary objective for an IFA is suitability.  Not trying to eek out the best returns possible.

For example, I cannot remember the last time I had a client with 100% equity.     So, comparing a managed fund like VLS100 against a portfolio that has less than 100% equity would be wrong.

The OP is invested in BlackRock Consensus 100. An IFA told him that the performance of that fund was poor and pointed to better performing funds. The implication was that he could do better than BlackRock Consensus 100. (I had misremembered the fund name. I thought it was LifeStrategy 100. The same comment applies though. Claiming that he can beat BlackRock Consensus 100 has no value unless he agrees to provide compensation if he fails to do so.) My understanding is that the IFA is breaking the FCA rules if he claims to be able to beat the market. I do not expect that his insurers would be happy either.

eskbanker

adindas said:

What about gilt/Bonds performance last year ??  
Did you observe the graphics, table that I have shown before ?? 

What about it? You're not seriously under the impression that investors buy bonds because they believe they'll deliver higher returns than equities (or even comparable performance), are you?

dunstonh

15 Years investing is a long wait ?. Well how many years typically investors are staying in the stock market ? 

Anyway if you see this graphics do investor need to wait 15 years before they realize that equity outperform bonds ?

You need better graphics and an understanding of life expectancy and period that an individual will be investing for.  With graphs, large falls appear smaller the further back in time you go.    You need to break that chart down into discrete periods and not cumulative to get a real idea of the volatility.

An annualised rate of return over 120 years smooths most of the ups and downs, including the really severe ones.   The average person is going to have the bulk of their money invested in a much shorter period.

15 Years investing is a long wait ?. Well how many years typically investors are staying in the stock market ? 

The bulk of investable assets will be in there 20-30 years as a maximum.  They may invest with regular contributions for 30-40 years but the values will be low for much of that.

15 years is a long wait if you are aged 67 and now looking to draw an income from your investments.    Think about a £500,000 fund that has just dropped 80% to £100,000.   That has turned a comfortable retirement into a situation where the person probably cant retire and it will not recover in their lifetime because the amount they need to draw will eat up any growth.   If they diversified their assets, they wouldn't have lost as much.

What about gilt/Bonds performance last year ??  

Going forward, last year doesn't matter.   You don't look back.  You look forward.
And what about years when its the stockmarkets turn to go through a 5% event?    If it was shares that fell 80% last year, would you now be avoiding them?

It is vital that capacity for loss, the objective and the individual behaviour is factored into the asset allocation.    There is no point in taking more risk than you need to.

adindas

dunstonh said:

15 Years investing is a long wait ?. Well how many years typically investors are staying in the stock market ? 

Anyway if you see this graphics do investor need to wait 15 years before they realize that equity outperform bonds ?

You need better graphics and an understanding of life expectancy and period that an individual will be investing for.  With graphs, large falls appear smaller the further back in time you go.    You need to break that chart down into discrete periods and not cumulative to get a real idea of the volatility.

An annualised rate of return over 120 years smooths most of the ups and downs, including the really severe ones.   The average person is going to have the bulk of their money invested in a much shorter period.

15 Years investing is a long wait ?. Well how many years typically investors are staying in the stock market ? 

The bulk of investable assets will be in there 20-30 years as a maximum.  They may invest with regular contributions for 30-40 years but the values will be low of the much of that.

15 years is a long wait if you are aged 67 and now looking to draw an income from your investments.    Think about a £500,000 fund that has just dropped 80% to £100,000.   That has turned a comfortable retirement into a situation where the person probably cant retire and it will not recover in their lifetime because the amount they need to draw will eat up any growth.   If they diversified their assets, they wouldn't have lost as much.

What about gilt/Bonds performance last year ??  

Going forward, last year doesn't matter.   You don't look back.  you look forward.
And what about years when its the stockmarkets turn go trhough a 5% event?    If it was shares that fell 80% last year, would you now be avoiding them?

It is vital that capacity for loss, the objective and the individual behaviour is factored into the asset allocation.    There is no point taking more risk than you need to.

67 years example ??
https://www.thisismoney.co.uk/money/markets/article-9211325/Average-age-new-Hargreaves-investor-falls-45-37-2012.html  
Stock market investors get younger: Average age of new Hargreaves Lansdown customers fell from 45 to 37 over the last eight years
15 years long wait for this typical average age investors ??

About volatility could you not calculate volatility based on normal S&P500 chart which is widely available ? it is even better to look it directly from the VIX to get the idea of S&P500 volatility. Here for instance
https://www.google.com/finance/quote/VIX:INDEXCBOE?sa=X&ved=2ahUKEwjjitDPlIT-AhWZh1wKHSpIAhkQ3ecFegQICRAg&window=5Y
All of that is easily available, ordinary people could easily see it. No need to calculate.
For individual stock people could just look at the Betha value of that particular stock. All of that are easily available.

coyrls

What does the average age of a new investor with HL have to do with the average age of an investor?  A new investor is not a "typical average age investor"

MK62

adindas said:

dunstonh said:

15 Years investing is a long wait ?. Well how many years typically investors are staying in the stock market ? 

Anyway if you see this graphics do investor need to wait 15 years before they realize that equity outperform bonds ?

You need better graphics and an understanding of life expectancy and period that an individual will be investing for.  With graphs, large falls appear smaller the further back in time you go.    You need to break that chart down into discrete periods and not cumulative to get a real idea of the volatility.

An annualised rate of return over 120 years smooths most of the ups and downs, including the really severe ones.   The average person is going to have the bulk of their money invested in a much shorter period.

15 Years investing is a long wait ?. Well how many years typically investors are staying in the stock market ? 

The bulk of investable assets will be in there 20-30 years as a maximum.  They may invest with regular contributions for 30-40 years but the values will be low of the much of that.

15 years is a long wait if you are aged 67 and now looking to draw an income from your investments.    Think about a £500,000 fund that has just dropped 80% to £100,000.   That has turned a comfortable retirement into a situation where the person probably cant retire and it will not recover in their lifetime because the amount they need to draw will eat up any growth.   If they diversified their assets, they wouldn't have lost as much.

What about gilt/Bonds performance last year ??  

Going forward, last year doesn't matter.   You don't look back.  you look forward.
And what about years when its the stockmarkets turn go trhough a 5% event?    If it was shares that fell 80% last year, would you now be avoiding them?

It is vital that capacity for loss, the objective and the individual behaviour is factored into the asset allocation.    There is no point taking more risk than you need to.

67 years example ??
https://www.thisismoney.co.uk/money/markets/article-9211325/Average-age-new-Hargreaves-investor-falls-45-37-2012.html  
Stock market investors get younger: Average age of new Hargreaves Lansdown customers fell from 45 to 37 over the last eight years
15 years long wait for this typical average age investors ??

About volatility could you not calculate volatility based on normal S&P500 chart which is widely available ? it is even better to look it directly from the VIX to get the idea of S&P500 volatility. Here for instance
https://www.google.com/finance/quote/VIX:INDEXCBOE?sa=X&ved=2ahUKEwjjitDPlIT-AhWZh1wKHSpIAhkQ3ecFegQICRAg&window=5Y
All of that is easily available, ordinary people could easily see it. No need to calculate.
For individual stock people could just look at the Betha value of that particular stock. All of that are easily available.

37yo (even 45yo) investors are not drawing on their retirement funds though.......rather they are highly likely to be adding to them, so even if they were 100% allocated to equities, an 80% fall for them is nowhere near the disaster it would be for a 60yo retiree who was exclusively reliant on his/her portfolio for income.......such a retiree might be unwise to risk such a portfolio, even if, historically, it might often give the best returns. As dunstonh said, it's about suitability and balancing risk/reward.

Prism

Some thoughts

Almost all investors add regular contributions (DCA) throughout their working life, and the opposite as they retire.
Not everyone, at all stages in life wants to nor should try and maximize returns as a primary goal - having enough by using  suitable investments for that individual is a perfectly good target.
Individual investors typically do better holding funds rather than direct equities as their ability to value a company is unlikely to be anywhere close to the level of research professional investment companies do - oh, and most of them can't do it well either.
In most sectors index funds in general perform better than managed funds, however as above, overall performance should not be the primary goal.

adindas

GeoffTF said:

Here is all you need to know:

https://www.youtube.com/watch?v=SwkjqGd8NC4

Here is more evidence that past performance is no guide to the future:

https://www.spglobal.com/spdji/en/documents/education/education-spiva-scorecards-an-overview.pdf

The OP will find out what the IFA's opinion is worth if he asks him to guarantee compensation if his recommendation under performs LifeStrategy 100.

Very interesting video clip. Many of information of the documentation above are based on the false presumption of "Efficient Market Hypothesis (EMH)"mostly coming from academics, rather than proven investors who have a proven track record of making money.

You don't need investing genius such as Warren Buffett Charlie, Munger, Peter Lynch, Bill Ackman, Howard Marks, Jim Simons, John Templeton, etc. or other contrarian investors to know that this is not the case in the real world. All of the contrarians do not believe in EMH. Everyone with common sense could easily see that this "Efficient Market Hypothesis (EMH)" is not true in the real world. In everyone personal life, have you never come across that you get a bargain. Keep in mind all of that information are easily available and for everyone to see. A few daily life examples

·  Everyone could see an elephant in the room, but while many people might be more interesting watching their trunk, a few people might be paying attention where their feet are heading as this elephant might hit you.

· Some people are paying for £11.95 per trade while a few people are paying £0 (nil)

· In mobile contract some people pay 1p (yes one penny) for 12GB 5G data, unlimited text minutes per month while other people pay for £10+ for the same allowance.

· Some people get 7%, 6% on their saving accounts while some people are getting minuscules interest on their savings for the same amount of money.

Also in the stock market there is what's the so called exuberance.

While everyone could see the current price of a security, not every investors could understand the reason why the price up or down because they do not watch the news frequently, do not understand the fair/intrinsic value of particular assets, they do not see the volume movement of that traded assets. When the volume of a particular security is increasing dramatically leading to overbought no wonder the price will hike temporary, the opposite also prevail.

GeoffTF

adindas said:

Very interesting video clip. Many of information of the documentation above are based on the false presumption of "Efficient Market Hypothesis (EMH)"mostly coming from academics, rather than proven investors who have a proven track record of making money.

No, it is not based on a hypothesis. That is wishful thinking. It is based on hard evidence. Some people get lucky for a while. A very few people get lucky for a very long while. It is all consistent with the laws of chance.