Global technology found.Am I too late?

BananaRepublic · 12 January 2018 at 3:27PM

Linton wrote: »

The point is I think that having only one satellite fund perhaps chosen solely because media hype leads the investor to believe it will outperform significantly isnt a thought through investment strategy. A coherent core/satellite approach is likely to lead to a set of varied satellites that together create a portfolio more suited to the investors objectives than the core.

But yes people can choose what they like and hopefully learn from the consequences.

Well obviously when you rephrase it in such terms, it is not a good idea. I was commenting on the idea of having more risky active funds alongside a core VLS100 fund. Those funds could be chosen 'wisely' for want of a better word. I can't say I am aware of any media hype over tech funds, but then again maybe I don't use the same media as yourself.

BananaRepublic · 12 January 2018 at 3:31PM

firestone wrote: »

i can understand an IFA not recommending a higher risk satellite fund to somebody who has gone with a lower risk multi asset as that would not look good for them,from a giving advice point of view.But from a DIY point of view i can't see a problem with a small portion of fun money so to speak but it may depend on how much is invested in the main fund/funds in the first place as to how much fun it is.
But from a picking point of view what apart from tech/AI would people pick that is not covered by a global fund water,timber,gold,cyber crime? there's many to pick from

Surely it is the customer's overall risk profile that matters.

I think the idea of a specialist fund is that global funds are just that, global. yes they include healthcare and tech, but in modest proportions. Someone might wish to buy an active fund to focus on healthcare, for example, if they believe that healthcare will outperform, or if they have an interest in healthcare, perhaps due to their career.

ArchBair · 12 January 2018 at 4:20PM

I did consider a small investment in PCT, but in the end I decided I had enough tech exposure in my portfolio. I hold around 10% in Scottish Mortgage which is quite high tech and my main global holding is the Bankers Investment Trust which also has some technology holdings so I 'm happy with that and, rightly or wrongly, resisted the temptation to add to this with PCT.

sixpence. · 12 January 2018 at 5:45PM

Question: The VLS funds are a bit over weight in tech and finance. Do these two sectors tend to go up and down at the same time? In the way that once the US is down EM will be up, for example.

Question 2: What would counter being overweight in tech and finance in a portfolio? As some sectors balance each other (see above example with geographic locations) in terms of diversification. Is gold? Healthcare? Curious.

Observation: there are 2 interesting arguments being made here. A) an investment in tech is an investment across sectors because every sector uses tech.

an investment across sectors is an investment in tech, for the same reason.

Surely both of these arguments lower the risk of investing in tech? British American Tobacco has done well over the years because generation after generation smokes and the population of the world has obviously increased. Similarly, generation after generation, business after business, will use tech and the role of technology in our lives – through anything from booking a taxi to performing open heart surgery on someone – tech will only continue to advance.

Therefore, as a sector, doesn't technology have a huge moat around it? Not trying to form an argument here, just asking a question as this seems the case to me. I am not an expert though, I'm someone who is just learning about investing now and trying to make good decisions

Jeems · 12 January 2018 at 5:53PM

economic wrote: »

Tech has had and it looks like it will continue to have strong earnings. Tech now is VERY different to tech in 2000. Companies are actually generating profits this time and they are growing profits a lot too.

Also there are different types of tech companies. Amazon is very different to apple which is very different to google. Something like amazon isn't even regarded as "tech" - its a consumer cyclical stock which makes sense as it generates by far most of its revenues through ecommerce.

Agreed. Back in the dotcom era, sky high valuations were based on the assumption that relatively large userbases would eventually result in big revenue - but no one really knew how.

Ironically on the amazon front, they are now very much tech focused - the money they make selling AWS dwarfs their traditional ecommerce business! https://www.usatoday.com/story/money/markets/2017/07/22/a-foolish-take-how-amazoncom-makes-money/103769610/

firestone · 12 January 2018 at 5:57PM

BananaRepublic wrote: »

Surely it is the customer's overall risk profile that matters.

I think the idea of a specialist fund is that global funds are just that, global. yes they include healthcare and tech, but in modest proportions. Someone might wish to buy an active fund to focus on healthcare, for example, if they believe that healthcare will outperform, or if they have an interest in healthcare, perhaps due to their career.

i am all for it if thats what someone wants and have done.Think i was looking more from an IFA or even a fund platform Q&A point of view that if they recommend VLS 20/40 they would probably not then offer say PCT as they would think it outside the risk profile and would not see it as a punt/fun which DIY you may

donmaico · 12 January 2018 at 6:04PM

dunstonh wrote: »

VLS is aimed at people at that believe in the passive philosophy. If you start making management decisions to involve more expensive and niche funds that bust the asset allocation then how does that fit with the passive philosophy?

I understand the core and satellite approach. However, that would typically involve multiple satellite funds to get you to the asset allocation you are after. I don't see VLS100 plus a tech fund as being similar to a typical core and satellite investor.

Isn't the L&G Global technology Index tracker fund passive? Anyway, after reading all the posts I think I have been pretty much convinced myself not to go down the global tech route, particularly in view of the fact the multi-funds I have have some exposure to technology already.
In view of that, the next question I have is whether it would be prudent to add a substantial lump sum to my 5 multi-funds whilst also adding either a Vanguard LS 80 ( i already have the 30) or a Blackrock Consensus 75?

bowlhead99 · 12 January 2018 at 7:15PM

donmaico wrote: »

Isnt the L&G Global technology Index tracker fund passive?

The tracker passively holds all the company equities that qualify to be in that particular index by meeting the industry sector criteria within the qualification limits for liquidity and free float and stock exchange on which they are listed etc.

But it is only holding stocks from that very restrictive market. If you were a hearty believer in the "don't be active, be passive' cause, you would not be going out and determining for yourself how much money should be in what type of tech stocks relative to health stocks, oil stocks, consumer cyclical stocks, defensive stocks, and all the other industries that you could buy. You'd just buy a world index and take the view that 'the market' will efficiently allocate your capital and that you can't get a better result by second-guessing how much cash to deploy into the "tech companies" sub-index at a point in time.

The fact that an index tracker allocates its investors' cash among investee companies following a published index rather than by having a fund manager micromanage its list of holdings based on that manager's research and decision-making ability, means it can call itself a tracker, a passive vehicle within its field. But it does not really follow from that, to say that you are embracing the passive mentality when you decide you'll 'top up' your core holdings of multi-industry regional or global trackers by having a punt on the concept that hightech companies at their current prices could be a better place to put your money right now than other types of companies.

donmaico · 12 January 2018 at 9:15PM

bowlhead99 wrote: »

The tracker passively holds all the company equities that qualify to be in that particular index by meeting the industry sector criteria within the qualification limits for liquidity and free float and stock exchange on which they are listed etc.

But it is only holding stocks from that very restrictive market. If you were a hearty believer in the "don't be active, be passive' cause, you would not be going out and determining for yourself how much money should be in what type of tech stocks relative to health stocks, oil stocks, consumer cyclical stocks, defensive stocks, and all the other industries that you could buy. You'd just buy a world index and take the view that 'the market' will efficiently allocate your capital and that you can't get a better result by second-guessing how much cash to deploy into the "tech companies" sub-index at a point in time.

The fact that an index tracker allocates its investors' cash among investee companies following a published index rather than by having a fund manager micromanage its list of holdings based on that manager's research and decision-making ability, means it can call itself a tracker, a passive vehicle within its field. But it does not really follow from that, to say that you are embracing the passive mentality when you decide you'll 'top up' your core holdings of multi-industry regional or global trackers by having a punt on the concept that hightech companies at their current prices could be a better place to put your money right now than other types of companies.

Thanks, I have pretty much made up my mind not get involved in it.My main concern now is what I do with what I have

BananaRepublic · 13 January 2018 at 9:53AM

firestone wrote: »

i am all for it if thats what someone wants and have done.Think i was looking more from an IFA or even a fund platform Q&A point of view that if they recommend VLS 20/40 they would probably not then offer say PCT as they would think it outside the risk profile and would not see it as a punt/fun which DIY you may

Combining VLS20/40 with a high risk active fund does indeed seem a bit odd. That said, someone might wish to partition a fund into short and long term pots, with the latter intended for use in ten+ years time and hence it can be more adventurous. Whether there are good arguments against this, I know not.

Global technology found.Am I too late?

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