I'm not surprised, Nick

TBC15

I think Nick may have discarded the Mein Fuhrer/ Road kill cut.

aroominyork

Linton said:

Lindsell Train funds have their own strategy.  Their performance against the market varies greatly over time. 5 years is too short a period  to come to any conclusion.

Active fund managers often describe an objective of outperforming the benchmark over rolling five year periods. That seems a sensible timeframe. LT tend to hide behind "over the long term". You shouldn't have to hang around for ten years trusting a fund will eventually come good.

masonic

aroominyork said:

Linton said:

Lindsell Train funds have their own strategy.  Their performance against the market varies greatly over time. 5 years is too short a period  to come to any conclusion.

Active fund managers often describe an objective of outperforming the benchmark over rolling five year periods. That seems a sensible timeframe. LT tend to hide behind "over the long term". You shouldn't have to hang around for ten years trusting a fund will eventually come good.

But that is what is demanded by the cult of the star manager. It is the well trodden path of the likes of Anthony Bolton, Bill Miller, Mark Mobius, Neil Woodford, and perhaps now Nick Train. The key to keeping one's record seems to be knowing when to retire.

Hoenir

Someone has to counteract some of the miscomprension that circulates endlessly on social media. An old adage. 

“A pin lies in wait for every bubble and when the two eventually meet, a new wave of investors learns some very old lessons.”

Linton

aroominyork said:

Linton said:

Lindsell Train funds have their own strategy.  Their performance against the market varies greatly over time. 5 years is too short a period  to come to any conclusion.

Active fund managers often describe an objective of outperforming the benchmark over rolling five year periods. That seems a sensible timeframe. LT tend to hide behind "over the long term". You shouldn't have to hang around for ten years trusting a fund will eventually come good.

Funds dont "come good ".  They simply perform in line with their underlying investments which are determined by the fund's strategy.  Which types of shares perform well varies over economic cycles of perhaps 10 years,or recently oerhaps longer.  To understand and assess a fund 5 years is totally inadaquate to cover an economic cycle. The same fund could have done remarkably well or remarkably badly depending on your choice of starting point.

Given sufficient time any non-perverse strategy should perform very similarly as exemplified by my graph.  Would you have suggested one should dump global trackers over the time when the Lindsell train fund was providing double the returns of the FTSE World?

Linton

aroominyork said:

Linton said:

Lindsell Train funds have their own strategy.  Their performance against the market varies greatly over time. 5 years is too short a period  to come to any conclusion.

6

Active fund managers often describe an objective of outperforming the benchmark over rolling five year periods. That seems a sensible timeframe. LT tend to hide behind "over the long term". You shouldn't have to hang around for ten years trusting a fund will eventually come good.

Funds come good when  global economic circumstances match  their strategy.  It is very little to do with the skills or otherwise of the fund manager.  If you want to learn something you need to look at performance across one or more economic cycles which typically last a decade. 

However that does not help you very much since you cannot predict the future. So choose a strategy and keep to it through thick and thin. In the very long term it does not make much difference which strategy you adopt. The worst thing you can do is to keep on changing your strategy to one which would have performed well in the recent past.

Hoenir

"Bull markets are born on pessimism, grow on scepticism, mature on optimism and die on euphoria". - Sir John Templeton

aroominyork

Linton said:

aroominyork said:

Linton said:

Lindsell Train funds have their own strategy.  Their performance against the market varies greatly over time. 5 years is too short a period  to come to any conclusion.

6

Active fund managers often describe an objective of outperforming the benchmark over rolling five year periods. That seems a sensible timeframe. LT tend to hide behind "over the long term". You shouldn't have to hang around for ten years trusting a fund will eventually come good.

Funds come good when  global economic circumstances match  their strategy.  It is very little to do with the skills or otherwise of the fund manager.  If you want to learn something you need to look at performance across one or more economic cycles which typically last a decade. 

However that does not help you very much since you cannot predict the future. So choose a strategy and keep to it through thick and thin. In the very long term it does not make much difference which strategy you adopt. The worst thing you can do is to keep on changing your strategy to one which would have performed well in the recent past.

Your premise is that fund managers add little value and all that affects fund performance is whether a fund's strategy is aligned with a point in the economic cycle. If that is the case your advice to "choose a strategy and keep to it through thick and thin" is not sensible; the only logical advice would be to hold a cap weighted index fund. Anything else, based on your view, would mean paying active management fees to revert to the norm over time.

Bostonerimus1

With funds that seek Alpha there will be some that find it and others that don't. The headlines always highlight the extremes of performance and tend to concentrate on the short term which is why they are not good guides to creating a portfolio. If you bought Nick Train's funds with confidence and understanding then you can make an informed decision about whether or not to continue to hold them. If you bought solely on performance hype then you are flying blind.

Linton

aroominyork said:

Linton said:

aroominyork said:

Linton said:

Lindsell Train funds have their own strategy.  Their performance against the market varies greatly over time. 5 years is too short a period  to come to any conclusion.

6

Active fund managers often describe an objective of outperforming the benchmark over rolling five year periods. That seems a sensible timeframe. LT tend to hide behind "over the long term". You shouldn't have to hang around for ten years trusting a fund will eventually come good.

Funds come good when  global economic circumstances match  their strategy.  It is very little to do with the skills or otherwise of the fund manager.  If you want to learn something you need to look at performance across one or more economic cycles which typically last a decade. 

However that does not help you very much since you cannot predict the future. So choose a strategy and keep to it through thick and thin. In the very long term it does not make much difference which strategy you adopt. The worst thing you can do is to keep on changing your strategy to one which would have performed well in the recent past.

Your premise is that fund managers add little value and all that affects fund performance is whether a fund's strategy is aligned with a point in the economic cycle. If that is the case your advice to "choose a strategy and keep to it through thick and thin" is not sensible; the only logical advice would be to hold a cap weighted index fund. Anything else, based on your view, would mean paying active management fees to revert to the norm over time.

Following cap weighting is a strategy like any other. Sometimes it can perform well such as in a boom other times badly such as in the following bust. Examine the first decade in this century.

But it is a fair question as to why one would want to choose some strategy other than simple cap weighting if they all end up in much the same place inI the long term.  The answer is in situations where long term return does not overwhelm all other considerations. I am not sure but think that LT global equity has been less volatile than a global index. Another axample is Woodford’s income funds which avoided the 2000 tech boom/ crash almost entirely.

More generally a reasonable objective, particularly for people depending on their investments to meet ongoing expenses, is to reduce short/medium term risk without sacrificing long term returns.