A question for those who are at least partially Active investors

Filo25
Filo25 Posts: 2,131 Forumite
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in Savings & investments
For those who do hold at least partially hold some active funds in their portfolio, I was wondering how you split your portfolio between Active and Passive or a combination of the 2 for the following, I am guessing the US at least will see more passive investment but wondering if there are other areas where passive tends to do particularly well v Active and vice versa.

Particularly towards a portfolio split based on geographical split and market cap.

So looking at US/UK/Europe/Japan/Asia Pac/EM and Frontier Markets on geography.

And Large v Small/Mid Cap or value funds if you hold any.

Partly out of interest and partly as I am still tweaking my final allocation for my upcoming SIPP transfers, and am interested in the views of those who are much more experienced than myself!

Thanks!
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Comments

  • chrisgg
    chrisgg Posts: 68 Forumite
    I hold trackers for US large cap, robotics and health care. The rest of my portfolio is in active at the moment, though I have previously held global equity trackers and FTSE 250 tracker. I think a blend of active and passive is quite a good way of doing things, and trackers are a good way of cheaply accessing large cap equity.
  • Prism
    Prism Posts: 3,803 Forumite
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    I am pretty much the same as Chris. I have passives in global tech and global health care. These average to about 75% US which means they pretty much fall under the US for passive guideline.

    I also have a passive for global robotics as I figure that there aren't any fund manager experts for this kind of stuff. I also have a tiny holding in Polar's new active robotics fund to keep an eye on it. I don't expect it to beat the passive fund.

    I would go passive for the US too but I have Fundsmith which covers me there.
  • Linton
    Linton Posts: 17,157 Forumite
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    Whether a fund is passive or not is totally irrelevent when I choose a fund to fill a gap in my portfolio. The main citerion is what the fund invests in and then check that the performance is reasonably good and consistent. Since trackers by definition are generally no better than moderate performers and there are fewer of them in any sector than actives I probably wont pick one. But that is no reason to make a decision either way in advance of doing some analysis.

    At the moment I dont hold any passive funds but have noticed that there are some potentially interesting US Small Cap trackers.

    Without having thought about it much I am somewhat suspicious of ETFs, particularly those that dont operate by full replication. Since numerically most passive's are ETFs (and I guess all ETFs are passives) there is a natural bias towards actives.
  • BananaRepublic
    BananaRepublic Posts: 2,103 Forumite
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    I think along almost the same lines as Linton, though I do have a small proportion of passives. That's more laziness on my part as I should really move them. They are the results of a transfer in from a company pension scheme to my SIPP.
  • darkidoe
    darkidoe Posts: 1,125 Forumite
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    Linton wrote: »
    Whether a fund is passive or not is totally irrelevent when I choose a fund to fill a gap in my portfolio. The main citerion is what the fund invests in and then check that the performance is reasonably good and consistent. Since trackers by definition are generally no better than moderate performers and there are fewer of them in any sector than actives I probably wont pick one. But that is no reason to make a decision either way in advance of doing some analysis.

    At the moment I dont hold any passive funds but have noticed that there are some potentially interesting US Small Cap trackers.

    Without having thought about it much I am somewhat suspicious of ETFs, particularly those that dont operate by full replication. Since numerically most passive's are ETFs (and I guess all ETFs are passives) there is a natural bias towards actives.

    The argument for passives are for the people who are uninitiated in investing and have very little or basic knowledge on terminology and technicalities of investing. Average performance is basically good enough for those steady investors. It will take some reading up and experimenting to get up to speed with picking decent active funds imo or perhaps I am too cautious.

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  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    darkidoe wrote: »
    The argument for passives are for the people who are uninitiated in investing and have very little or basic knowledge on terminology and technicalities of investing. Average performance is basically good enough for those steady investors. It will take some reading up and experimenting to get up to speed with picking decent active funds imo or perhaps I am too cautious.

    That's not really the argument, it's more that after fees a passive investor will beat most active ones and be a little above average and that over many years they will beat an increasingly large number of active investors. Whether or not you believe that will probably dictate your investing style.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • firestone
    firestone Posts: 520 Forumite
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    by a "little above average" do you mean the index or others? As you say whether you believe or not may dictate your investing style but people may believe and still go active as human nature will make you want to find the best.
    Its like the upcoming winter Olympics you could take all the scores in the Ski jump and get a good average score but it probably will not be the Gold medal score.
    I got into passive investing via a pension due to the choices and think they work well with regular payments.But to a certain extent i run some of my active funds in a passive way in that i have held them for a long time as i am happy with the results and feel (fingers crossed) that they offer some protection in a downturn not offer by a tracker.
    One good thing about the growth of trackers/platforms is it has forced the fees down and made it
    more worth looking for the better managed funds then maybe 20 years ago.But there was a good article on Trustnet this week about the true cost of 100 most popular funds & any hidden charges inc. VLS etc
  • BananaRepublic
    BananaRepublic Posts: 2,103 Forumite
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    bostonerimus wrote: »
    That's not really the argument, it's more that after fees a passive investor will beat most active ones and be a little above average and that over many years they will beat an increasingly large number of active investors. Whether or not you believe that will probably dictate your investing style.

    That’s true when comparing funds within an index, but often there is no index, or no passive funds tracking that index. Active funds allow more choice and better performance. There are lots of FTSE 100 trackers, and yes most will beat active FTSE 100 funds. But the index is pants. I fell into the passive hype 15 years ago, something I now regret though fund comparison tools are now much better.
  • TBC15
    TBC15 Posts: 1,452 Forumite
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    BananaRepublic wrote: »
    That’s true when comparing funds within an index, but often there is no index, or no passive funds tracking that index. Active funds allow more choice and better performance. There are lots of FTSE 100 trackers, and yes most will beat active FTSE 100 funds. But the index is pants. I fell into the passive hype 15 years ago, something I now regret though fund comparison tools are now much better.

    Did you go with the Motley Fool mantra at the time?

    Trustnet has been a huge help for me over the years, I feel a bit guilty not giving them any business.
  • economic
    economic Posts: 3,002 Forumite
    I am personally about 50% passive (via global and US trackers) and 50% active. Of the active i am 50% in managed funds (fundsmith, baille alpha growth, BIOG) and 50% single stocks. I like it this way as i have a mix of growth stocks and value stocks as well which you dont get with the flagship funds like fundsmith who are all about growth (and therefore more volatility).

    IMO the good performers like fundsmith have done well because they select growth stocks only and similar funds to this have performed roughly similar in % terms recently.

    There is also not a lot of track record for some of these "outperformers". I would be a bit concerned if one was all in in a growth fund like fundsmith. Expect a lot of volatility. It can of course also pay off while we are in this "growth" boom but things can quickly and easily change.
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