Fund Selection

chiang_mai

Just for humour and interest value, of my managed funds:

My SmartGarp UK holding has returned 22% since late April, (6.3 Months)
SG GEMS returned 23%, (6.0 months) and
M&G Japan returned 19%. (5.4 months)

I just traded SG Europe and I think it returned 17% 
 

Qyburn

April puts it in the middle of the Trump Slump. What are the equivalent YTD figures?

This is why I don't like trailing returns or rolling averages. The figure for say 6 months is affected by what happened 6 months ago just as much as what's happening now.

chiang_mai

Qyburn said:

April puts it in the middle of the Trump Slump. What are the equivalent YTD figures?

This is why I don't like trailing returns or rolling averages. The figure for say 6 months is affected by what happened 6 months ago just as much as what's happening now.

I didn't buy into those funds until April so I don't track YTD figures, only my own profit for the period owned (months in brackets). I'm showing 23 April, 2 May and 19 May respectively.

thunderroad88

Interesting discussions… worth saying that buying active funds does not commit you to them for life. At certain times they can and do add value to a pf. Even though I’m 60% in a global tracker, I have chosen some active funds to manage my move to diversify more away from US and tech to other regions and value. I’ve had excellent results from them but I’m not wedded to them and if they start underperforming my benchmarks for them or the investing environment significantly changes or I can be bothered to monitor them anymore, then I can move on elsewhere or back to the index again. I personally do believe that we are entering a period where quality stock picking will become more relevant than maybe it has been during the last 5 years of easy index generated returns…but if I’m wrong it’s not difficult to change horse.

Cus

A lot of people will not think that the level of fund analysis that OP is presenting is worth it as they believe that it can't beat the market over the long-term so why bother. Statistics show that to be more likely.  I personally don't think its black and white, and that this effort can lead to better performance but it's takes full time work. For a non professional to manage this is tough.

chiang_mai

Cus said:

A lot of people will not think that the level of fund analysis that OP is presenting is worth it as they believe that it can't beat the market over the long-term so why bother. Statistics show that to be more likely.  I personally don't think its black and white, and that this effort can lead to better performance but it's takes full time work. For a non professional to manage this is tough.

All of what you wrote is true, the detailed analysis can beat the index as already proven but it does take a lot of time and effort. The real benefit, I think, is understanding what you own and in being able to make better decisons when you make changes to your holdings. It is not for everyone but elements of the approach might be.

masonic

Beating the market over the long term is not all that difficult. You just need to take on more risk where there are risk premiums to be harvested over a sufficiently long timescale in a market that always bounces back. You won't beat it consistently, but you don't need to do that. What is a must is enough time to ride out the declines and/or luck to select the risks that don't materialise during your holding period. Educated guesswork can help with that, educated being the operative word. You do need to keep an eye out for any developments in your current investments and keep up to date with the financial press, but if you're already sufficiently interested to do that, you are most of the way there.

I'd be reluctant to hand of selection of funds in a market-beating strategy to a professional, with another layer of fees clawing back a large slice of the excess returns that can be generated (and being taken whether or not excess returns are generated). These are the realms of discretionary investment management, where services tend to be targeted at HNW and institutional investors with "reassuringly expensive" price tags, not your retail IFA or investment provider's do-it-for-me option.

ShinyStarlight1

ircE said:

If you'd like more engaging conversation on investments I suggest you try other communities like Citywire and Lemon Fool.

I hope you carry on posting here, though. I’m finding your posts very illuminating, Chiang_Mai.

chiang_mai

Qyburn said:

April puts it in the middle of the Trump Slump. What are the equivalent YTD figures?

This is why I don't like trailing returns or rolling averages. The figure for say 6 months is affected by what happened 6 months ago just as much as what's happening now.

One other aspect of what you wrote that needs to be commented on:

What you wrote above (in bold) is true but the only two inmportant factors are when you buy and when you sell. The fact that I bought in during the Trump Slump is what we all would ideally like to do, buy the dip or at the bottom. The second part of getting out when the party is nearly over is just as difficult but not impossible, if you remain alert and put in time and effort to monitoring things. Smartgarp UK returned 38% over 12 months and I saw 22% of that over 6.3 months (and still going), because I bought when I did. Either way, if you had held it for the year or sold at the half year, it would have been a very good deal.  GEMS returned 29% over the past year and I took 23% after six months (again, still going), again, by buying the dip/slump.    

ShinyStarlight1

Bostonerimus1 said:

chiang_mai said:

Bostonerimus1 said:

chiang_mai said:

I don't know why you'd be so astonished, it's an obvious conclusion to draw! Forums such as these are often prone to members trying to maintain their "expert" status without ever putting forth anything really useful. And to be clear, I'm not courting views, it's more that I'm curious to see who actually understands what! It's easy enough to buy a global tracker or three and using the right lingo, say you understand it all. On the other hand, the likes of Morningstar gives us all these metrics and analytical data, it seems counter productive not to at least understand what it all means and wherever possible, use it. Of course you don't have to do that and chances are you may even obtain the same result, more easily, if you take the simple approach. But there again you may not. My experience is that it's better to understand the mechanics of what's under the hood, at a detail level, in whatever I do in life and investing is no different, it helps when you break down in the middle of nowhere.   

Yes it's good to understand what's in the black box, but for most people they simply don't need to and most importantly don't want to understand the workings of their funds. For those reasons we have multi-asset funds and "Lazy Portfolios". There will be some nerds, and I use the term with admiration and affection, that do want to understand all the "nuts and bolts", but that's simply not appropriate for most people. It's like some one buying a drone and needing or wanting to know the PID/PDF servo control on the propeller motors. Or someone with diabetes wanting to understand the PI3K/AKT pathway.

Your analogies are a bit extreme but I get your point. Whether or not it's approppriate to tilt more towards being a  nerd, depends on how comforrtable they are putting all their trust and faith in one or two trackers and handing all control and responsibility for your financial future, to the likes of Vanguard et al. But I suppose that approach has always worked well in the past so it must continue to work well in the future, right!  

Many people struggle with percentages, compound interest and the difference between tax-free and tax deferred. It's good that you are sharing your approach, but it will be too much for most people

Speaking as someone who understands very little about investing, and am unfamiliar with most of the terminology, I really appreciate the clarity and detail of Chiang_Mai’s posts. They are helping me to learn by demystifying the decision-making process. I enjoy the opportunity of looking under the bonnet and gradually teasing out the tangle beneath it. I also appreciate the effort and generosity that such detailed posts require.