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... but probably ended up losing you money.
Too early to tell with this bunch, but for the record I have invested in a managed biotech fund, RIT Capital, Jupiter European Opportunities IT, and Invesco Perpetual Global Financial Capaital. These represent a punt on biotech, buying into a multi-asset IT with a fair bit of private equity, buying into Europe during the dark days of January 2012 in the hope it was close to bottom, and guessing that global financial fixed interest was over-sold.
Right or wrong, it's only 5% of my portfolio.I'm a scientist by background, so I'm only interested in what is rational and proven by empirical evidence. The overwhelming evidence suggests that only a handful of fund managers have ever shown that they have any ability to reliably and consistently beat the market.
Yup, I agree, but that still doesn't mean that I'm not struggling with a veritable menagerie of demons over the issue.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
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OTOH, while the 'Extra Special' funds are very often no different from than the Basic ones, just more expensive (just check the holdings).
Suggest you check the holdings, particularly % by sector.
A FTSE100 tracker's top sectors are:
Oil& Gas - 18%
Financial - 16%
Consumer Goods - 14%
Looking at the top performers over 5 years for UK Equity I find that the sector allocation is totally different.
eg for the top performing UK Equity managed funds the top sector is:
MFM Slater Growth - electronics
Unicorn outstanding british companies - industrials
Liontrust special situations - industrials
A bit further down:
Threadneedle UK return - industrials (again)
etc etc
The trackers have "industrials" at the 8th position with a mere 6% holding.0 -
Rollinghome wrote: »You're more patient than me.
Only on the outside.
One of the problems has always been differentiating between luck and judgement even over very long periods.
Agreed, and I don't pretend my current approach is scientific, nor that I'll last the whole decade. If transfers are made cheaper and faster, it could all go passive in the blink of an eye.I don't think I give more thought to mine than to hers and it's certainly not deliberate, all our assets are shared. So be sure to have your excuse handy.
As it's almost impossible to get her to take a look, even just once a year, I don't have too many problems in that regard. However, I have announced a retirement date to her (her 55th birthday) and have indicated how much we'll have per year, so I need to get it right!I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
Looking at the top performers over 5 years for UK Equity I find that the sector allocation is totally different.
Which is all very good. No one says it's not possible.
The point is - could you have reliably picked those funds to become the top performers five years ago? Without the benefit of hindsight?
Did you invest in them five years ago? If not, why not?0 -
The point is - could you have reliably picked those funds to become the top performers five years ago? Without the benefit of hindsight?
I picked Liontrust Special Situations about two years back. It's a shame I also picked a fair bit of 5h1t to hold alongside ...I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
I don't. But I've had a lot of useful advice already so if the thread drifts a bit now it doesn't matter so much. What I didn't want is for the thread to head straight off into the "why not managed funds" argument before even getting on topic.
... but probably ended up losing you money.
He never says that at all. Clearly it is possible to beat the market. What he presents is the evidence that it's very difficult to do so and finding a fund manager that can do it consistently is even more difficult.
I'm a scientist by background, so I'm only interested in what is rational and proven by empirical evidence. The overwhelming evidence suggests that only a handful of fund managers have ever shown that they have any ability to reliably and consistently beat the market. The problem is finding the ones that can do that in advance of you investing, hoping they don't jump around between funds, and hoping their career outlasts your investment period.
I'm not falling for any evangelism, it's a simple rational argument based on facts that when considering the balance of probabilities index funds offer the highest likelihood of success.
What is THE market that fund managers cant beat? Beating the FTSE 100 over an extended period has been pretty easy.
I suggest you spend a little time playing with the data on say trustnet where you can compare in any chosen sector how funds have actually performed for a time period of up to 10 years.
A simple scientific test - If your assertions that managed funds do not consistently perform better than the index are correct you would surely see the trackers rising in the league tables over that period as random fluctuations are increasingly averaged out and the underlying trends of a 1-3% advantage for trackers predominate. I leave it to you to find whether this does actually happen.0 -
gadgetmind wrote: »I picked Liontrust Special Situations about two years back. It's a shame I also picked a fair bit of 5h1t to hold alongside ...
Which certainly suggests a large dose of luck (or bad luck) was involved in those decisions.
I do not believe I could do any better, and so the decision falls to index trackers.0 -
A simple scientific test - If your assertions that managed funds do not consistently perform better than the index are correct you would surely see the trackers rising in the league tables over that period as random fluctuations are increasingly averaged out and the underlying trends of a 1-3% advantage for trackers predominate. I leave it to you to find whether this does actually happen.
You're missing the point.
Did YOU select and invest in what became the top five funds over the last five years? If not, why not?
It's practically impossible to know which funds are going to perform. Not least of the problems being the managers jump around every few years so a fund that did well over the last five years might not even be managed by the same person for the next five years.
Trackers don't rise to the top of the league tables because there are always funds that beat them over certain periods. Choosing those funds in advance is the difficult part. You're just as likely to choose a fund that underperforms as you are to select a fund that outperforms.0 -
I'm not too sure what it is you're asserting but it's possible you've overlooked the rate at which under-performing managed funds are discontinued or merged. More than 14% of the All-companies sector funds listed by Trustnet have no data beyond 5 years.A simple scientific test - If your assertions that managed funds do not consistently perform better than the index are correct you would surely see the trackers rising in the league tables over that period as random fluctuations are increasingly averaged out and the underlying trends of a 1-3% advantage for trackers predominate. I leave it to you to find whether this does actually happen.
Lots of discussions already putting the views of the religious zealots from both sides of the argument. There are valid arguments for holding certain managed funds but not necessarily because they can be expected to out-perform.0 -
Now that the discussion thread has diverged a little (and very useful thread as other people have said!)
Could I ask what sort of return you're hoping to get over the long term, in real terms, from this strategy?0
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