Beating passive trackers?

Oldhand_2

There is - at least in the papers I read - an advert which is simplicity itself. The main text is:

'I aim to maximise your ISA investment by signifiantly outperforming passive tracker funds.'

This is an open invitation, so I compared this fund to Vanguard's Global All Cap Index. It didn't do too badly, but it's more volatile and unfortunately didn't quite manage to outperform VG's fund, lagging by 6.8% over five years, and with higher costs.

It's Blue Whale Growth fund, as I'm sure you'll want to know.

Hoenir

What's your question ?  If there is one. 

Oldhand_2

Just a comment that I thought might be interesting. Not every thread has to be a question, does it?

El_Torro

If we look over the last 10 years we can find many investment strategies that would have beaten a global tracker. Identifying the investment strategies that will beat a global tracker over the next 10 years is a lot harder to do successfully though.

As you say the Blue Whale fund's track record isn't great so far.

Ciprico

Think about it as beating the average, which is what a tracker should be....

To reliably beat the average you have to have an "edge".

If there isn't an obvious edge you're depending on luck...

... which might work, for a while...

aroominyork

El_Torro said:

As you say the Blue Whale fund's track record isn't great so far.

Not sure why you say that. Since launch in 2017 Blue Whale is up about 160% compared to 120% for a developed world index fund, albeit it with much greater volatility. 

sausage_time

I aim to maximise your ISA investment by signifiantly outperforming passive tracker funds.

That word in bold (my highlight) is quite important in this context!  I aim to win £1M in premium bonds.

dunstonh

This is an open invitation, so I compared this fund to Vanguard's Global All Cap Index. It didn't do too badly, but it's more volatile and unfortunately didn't quite manage to outperform VG's fund, lagging by 6.8% over five years, and with higher costs.

5 years is too short a timescale to measure it.

In a cycle where global exc US beats US, then outperforming a global tracker would be easier.   In a cycle when US is best, outperforming a  global tracker would be harder.

thunderroad88

dunstonh said:

This is an open invitation, so I compared this fund to Vanguard's Global All Cap Index. It didn't do too badly, but it's more volatile and unfortunately didn't quite manage to outperform VG's fund, lagging by 6.8% over five years, and with higher costs.

5 years is too short a timescale to measure it.

In a cycle where global exc US beats US, then outperforming a global tracker would be easier.   In a cycle when US is best, outperforming a  global tracker would be harder.

Which brings us back to the debate as to whether we might be entering that first cycle…I think we’re potentially closer to it than we’ve been for quite some time. Accordingly I’ve moved some of my passive global tracker money into some actively managed funds to slightly tweak my pf in terms of both factor and geographic exposure to leave me 50/50 US vs ROW. Sure I’ll pay slightly more in fees but I think given the likely volatility in the coming years, I don’t mind paying for some expertise to help reduce that volatility in my pf while still achieving at least average returns. 

GeoffTF

thunderroad88 said:

Sure I’ll pay slightly more in fees but I think given the likely volatility in the coming years, I don’t mind paying for some expertise to help reduce that volatility in my pf while still achieving at least average returns. 

The only relevant expertise here is knowledge of the future, and nobody has that. Look at what has just happened to expectations of future UK interest cuts. I am not willing to pay anything for someone the guess what is going to happen.

kempiejon

GeoffTF said:

thunderroad88 said:

Sure I’ll pay slightly more in fees but I think given the likely volatility in the coming years, I don’t mind paying for some expertise to help reduce that volatility in my pf while still achieving at least average returns. 

The only relevant expertise here is knowledge of the future, and nobody has that. Look at what has just happened to expectations of future UK interest cuts. I am not willing to pay anything for someone the guess what is going to happen.

Quite, if we can be sure of collecting at least average returns that's worth paying for but how can anyone know?