Advice appreciated for researching and picking funds compared to what I currently do

Linton

isayhello said:

Linton said:

I base my choice of funds on the overall allocations to sectors, countries, sizes, etc given by Morningstar XRay with the intention of achieving a well balanced portfolio compatible with my objectives. So the over-riding criterion for buying a fund is what it invests in.

@Linton Thanks, I think I've looked at that site for some info, are there any sites or places you look for opinions or forecasts on the funds you pick or you don't bother with that?

I take the view that the future of the markets is completely unknown. Opinions and forecasts on funds can be safely ignored as they are of zero value. It makes little difference which funds you choose as long as the overall allocations are appropriate.

The best you can do is to invest as widely as possible and ensure your total portfolio has minimal  exposure to single point failures that only affect parts of the market.

dales1

.. and so following on from Linton's comments, please refer back to Bostonerimus' post on page 2.

Simple and easy and the best in the long run.

Dales

GazzaBloom

isayhello said:

GazzaBloom said:

Ref currency. For example, when investing in a fund that hold US stocks when the fund's denominated currency is GBP then the currency fx rates can come into play.

When the pound strengthens against the dollar the value or your US investments go down and vice versa, which is in addition to any stock price variations.

You can see this clearly with the difference between the year to date performance of the Vanguard S&P500 ETF - VUSA vs the S&P500 index:

VUSA is up 18.16% YTD:

VUSA £71.27 (▲0.78%) Vanguard S&P 500 UCITS ETF USD Dis | Google Finance

But the S&P500 index is up 24.69%:

.INX 4,768.37 (▲0.59%) S&P 500 | Google Finance

GBP is up 4.65% against the USD YTD:

.INX 4,768.37 (▲0.59%) S&P 500 | Google Finance

So, the fx rates are a headwind this year for UK based US index investors. At other times it can be a tailwind. In particular, when there is a global crisis money tends to flow to the USD and GBP drops which can be in the UK based US investors favour.

When you hold a currency hedged version of a fund the fx variation is removed from the equation and you will more closely track the underlying index but there is typically a small uptick in fees for the currency hedging.

Yeah Aviva is a little cheaper for the HSBC Islamic fund at 0.46%, other index funds are lower on Aviva at 0.16%, so 0.3% more expensive but it does perform well so not the end of the world but worth keeping an eye on.

@GazzaBloom ah ok so if I follow, the GBP that you invest in the fund is converted to USD and vice versa if you sold, so depending on the rate at sell time you could get more pounds if GBP was stronger?

Are there always hedged versions of funds available on some platform then? 

No, it doesn't work like that, at the time of selling US funds the amount you are selling is already reduced in value due to the strength of the pound at the time. The amount you are seeing in your account is already converted. 

Read this, probably explains it better that I can:

Vanguard Asset Management | Personal Investing in the UK | Vanguard UK Investor (vanguardinvestor.co.uk)

isayhello

Linton said:

I take the view that the future of the markets is completely unknown. Opinions and forecasts on funds can be safely ignored as they are of zero value. It makes little difference which funds you choose as long as the overall allocations are appropriate.

The best you can do is to invest as widely as possible and ensure your total portfolio has minimal  exposure to single point failures that only affect parts of the market.

Thanks, agreed, I don't think my fund choices are too bad but maybe I can simplify a bit. I should look at the decision to stay with Prudential again, I was advised that their charges aren't too bad so I stayed with them but might be time to evaluate again and a question for the Pensions board. Thanks again

Albermarle

GazzaBloom said:

isayhello said:

GazzaBloom said:

I look for the lowest fees, passive index trackers with a solid past performance, and global coverage. Taking particular note how the fund performs during market downturns, not that there have been many in the last 10 years, which is the furthest back some trackers history goes. It all comes down to what selection of funds you have access to on your platform. Filtering for low cost equity trackers with my Aviva pension gives me a choice of either holding individual regional large cap trackers (US, UK, Europe, Pacific Rim, Japan etc) or hold a single global tracker such as the Blackrock MSCI World Index which can be held in the currency hedged or non hedged version or the HSBC Islamic Index.

I really like the HSBC Islamic Global Equity Index you have listed and have 40% of my pension invested in it. It is a bit “growth”, tech and US leaning which some people will get their knickers all in a tizzy over though, plus, it tracks an index of only 100 companies which combined with the committee inclusion rules for constituents means you could almost view it as a quasi active fund, albeit low cost and it does cover most global regions of large cap companies.

But, aware of all of the above, I like it and happy to hold a chunk in it.

I have been heavily skewed to US holdings for some time so thoughts on currency and valuations comes into play and are on my mind as I gear up for retirement and prepare to move from accumulation to drawdown. So, there will be some asset class mix and portfolio adjustment changes over the next year or so for me.

@GazzaBloom Thanks for that, just a few questions, I'd never thought about currency hedged or non hedged, what do you mean by that?

The HSBC Islamic fund seems to be doing ok, I haven't heavily invested in it because with Prudential it has a higher charge than some of the others, I think its 0.6%, do you pay less with Aviva for this fund? Thanks for the tip about looking at how they perform in downturns, good to consider.

Ref currency. For example, when investing in a fund that hold US stocks when the fund's denominated currency is GBP then the currency fx rates can come into play.

When the pound strengthens against the dollar the value or your US investments go down and vice versa, which is in addition to any stock price variations.

You can see this clearly with the difference between the year to date performance of the Vanguard S&P500 ETF - VUSA vs the S&P500 index:

VUSA is up 18.16% YTD:

VUSA £71.27 (▲0.78%) Vanguard S&P 500 UCITS ETF USD Dis | Google Finance

But the S&P500 index is up 24.69%:

.INX 4,768.37 (▲0.59%) S&P 500 | Google Finance

GBP is up 4.65% against the USD YTD:

.INX 4,768.37 (▲0.59%) S&P 500 | Google Finance

So, the fx rates are a headwind this year for UK based US index investors. At other times it can be a tailwind. In particular, when there is a global crisis money tends to flow to the USD and GBP drops which can be in the UK based US investors favour.

When you hold a currency hedged version of a fund the fx variation is removed from the equation and you will more closely track the underlying index but there is typically a small uptick in fees for the currency hedging.

Yeah Aviva is a little cheaper for the HSBC Islamic fund at 0.46%, other index funds are lower on Aviva at 0.16%, so 0.3% more expensive but it does perform well so not the end of the world but worth keeping an eye on.

To complete the picture this hedged S+P500 fund is 26.5% up YTD
Fidelity Index US Fund P GBP Accumulation Hedged Price and Performance | GB00BHQSS241 | Fidelity

More than the S+P index itself for some unknown reason.