US fund "ideas"

masonic

aroominyork said:

Yup, and the lack of small cap premium is why I sold US small caps a couple of years back and generally stick with the index in the US - very little outperforms in the large cap space too. Buying it again now (and, looking some more at SPX4, I see your rationale) would more more tactical than long-term strategic. Have you thought about XDPG, equal weighting the S&P?

I'm not a fan of equal weight funds. The trading required to keep them balanced will be a drag on returns, and it would represent going against the market in a far greater way than I'd seek to do. A better option would probably be holding something like a value factor fund alongside the conventional tracker, but I haven't been tempted to do that either - just underweight the US a bit in general, and this recent tilt into the mid-caps. Nothing I do is a big bet, because I have learned through many years experience that I am almost equally likely to get things wrong as right.

aroominyork

I bought value factor PSRW last year for the slightly dubious reason of balancing Fundsmith. I want to start reducing Fundsmith - and if I bought SPX4 that is probably where I would take funds from... so whether to reduce PSRW at the same time? I think it's a pretty nice fund, but quarterly dividends in USD are a giant pain. I expect the annual rebalancing of PSRW is a drag on returns in the same way as an equal weight fund.

Linton

I hold an S&P tracker and an active US small companies fund. Apart from keeping the largest companies  to less than 60% of my portfolio, the objective is to get some extra diversification from the megatechs, to assist balancing between sectors and value/ growth.  I have looked at US factor/multifactor  index funds but haven’t yet found a 2 fund combination that provides what I am looking for without too much of a hit on performance.

i have also looked at equal weighting but feel it goes too far.  Full market cap weighting puts too much into the megatechs but having no weighting at all is difficult to justify.

aroominyork

Linton said:

I hold an S&P tracker and an active US small companies fund.

Which one, out of interest? I used to hold T. Rowe Smith's, which was a good and consistent performer with relatively low volatility (a bit like how I see Liontrust's UK smaller company offerings).

Linton

aroominyork said:

Linton said:

I hold an S&P tracker and an active US small companies fund.

Which one, out of interest? I used to hold T. Rowe Smith's, which was a good and consistent performer with relatively low volatility (a bit like how I see Liontrust's UK smaller company offerings).

Also T Rowe Price.

aroominyork

masonic, can you explain the difference between SPX4 (GBP) and SPY4 (USD). I don't think the former is hedged so I am confused.

GazzaBloom

Armchair economists abound.

I prefer to recognise and accept the limitations of my expertise and just buy an overarching US stocks index and hold it for the long term to satisfy my desire to invest in US companies.

I expect to do just fine, perhaps even better than some fund managers and save myself a whole load of pointless effort typing unnecessary words on internet forums.

masonic

aroominyork said:

masonic, can you explain the difference between SPX4 (GBP) and SPY4 (USD). I don't think the former is hedged so I am confused.

They have different trading currencies. Whatever you are using to generate that plot is failing to account for this and showing performance in USD vs GBP instead of rebasing to a single currency.

masonic

GazzaBloom said:

Armchair economists abound..

For me it's not really about economic predictions. Three closely related companies now make up nearly 20% of the S&P500. That's a bit too much concentration risk for my liking. Going global gets them down to 12% and I've further tweaked my allocation to reduce them to about 8%.

Putting all your eggs in a single country basket is an active management decision driven by economic arguments. Or do you have a non-econonic reason for picking the USA over your home market or world?

Bostonerimus1

The "irrational exuberance" of the US stock markets over the last few days means I'm up silly amounts of money. I have fears for the US economy because of the incoming administrations inclination to protectionist policies and the ethics of many in government and business. I will be tilting a bit away from the US and taking profits to give to organizations that I hope will help the US survive the next 4 years.