For those familiar with Lars Kroijer and his views
Comments
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I would have thought something like VLSxx isn't much different from your portfolio of 3 index funds.bostonerimus wrote: »Now lots of people won’t be as geeky as that which is where something like VLSxx comes in and maybe even the advice of a sensible IFA.0 -
I would have thought something like VLSxx isn't much different from your portfolio of 3 index funds.
Well VLSxx is a fund of funds, but once you drill down to the stocks held I imagine they could be made to look quite similar.
Of course my 3 index funds aren’t everything in my portfolio; I have rental property for income, plus pensions, state pension, cash, deferred annuity etc.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
The OP seems to come down to active versus passive, a much discussed topic here over countless years ...
Index trackers have the advantage that management costs are (usually) low, and much lower than for active funds, and in many markets on average they outperform active funds over the long term. So unless you can know which active funds to pick when, passive funds are often the way to go. Woodward provides the best example of an active fund manager going off the boil.
However, not all indexes/themes have an index fund, in which case if you want exposure to that index/theme, you'll have to go active. And apparently in some markets (unlike the US) index funds do not outperform active funds.
And as Bostonerimus reminds us, stock markets are not the only investment vehicle. In fact you might want to buy vehicles. Or property. Or something else.0 -
I knew there was something the book raised. I just can't find the bloody section to quote it now so i'm going to have to go off a hazy memory but now that i've only remembered it on page 3 of the thread it may get buried.
I'm pretty sure it was the Japanese market that Kroijer mentioned. I could be wrong on the country though.
Now from what i read i was of the belief that say you're in your 20s-30s and investing for your 'typical' retirement. You have 30-40 years of investing ahead of you.
So people reference huge crashes. It's all ok exposing yourself to huge risk, VLS100 going all in on equities (not specifically VLS100 btw) but what would you do in the event of big dips? Hold your nerve or panic sell or whatever.
Now i was of the belief that it 'doesn't matter' - i've got 30 years ahead of me so the market will come good again, crash again, come good again and so on. Hopefully it's good when i retire.
But from reading the book & this mentioning of Japanese market, i'm sure he said something like 20 years on from some bad crash (i'm sure you guys will know what i'm referring to but i'd never heard of it before) and it's still not where it was.
So the belief of it'll always come good after a crash (if you're investing for the long term) may not be true? Not if we're talking long term as in a typical working life (say 30-40 years of investing (30 in my case)).
Wasn't really sure what to make of that and wondered what others who are more in the know thought.
Kroijer mentions that early on in the book too.BananaRepublic wrote: »Or property.0 -
JustAnotherSaver wrote: »But from reading the book & this mentioning of Japanese market, i'm sure he said something like 20 years on from some bad crash (i'm sure you guys will know what i'm referring to but i'd never heard of it before) and it's still not where it was.
In 1990 the Nikkei 225 lost over 40% in a year , and has never recovered since. To say markets always recover is therefore factually incorrect. The big loser in the UK were those that held endowment policies to repay their mortgages. As investment returns suffered.
Hence why bonds have historically been considered key to diversify portfolios. In the eventuality that such an event occurs. 100 year market averages hide a multitude of sins.0 -
Linton, if you are so confident that your strategy will meet your objectives and these objectives require higher returns than you would get from low cost index funds, does that not mean that you do consider that you have an edge? Is it managing the risk and asset allocation that gives you that edge?
My strategy has underperformed indexes like the FTSE World and also VLS100 over the past couple of years because the US has outperfirmed other areas recently and my % US is much less than that in the indexes. Over 5 years I am still well ahead
Beating passive fund performance is not an objective, it merely adds a bit of personal satisfaction. The objective for my set of portfolios as a whole is to provide a steady income of at least 4%, and preferably a lot more, of money invested for the rest of my and my wife's life. The growth portfolio objective to provide most of that return whilst minimising the effects of single point failures and correlation by maximising diversification.
Managing risk and asset allocation is to help ensure the income is steady not to maximise long term return. However my expectation is that a very satisfactory long term return will be a useful side effect perhaps because a focus on diversification and managing correlation gives me the confidence to invest in higher risk/return funds than would otherwise be the case.
What is really needed now is a serious crash to see how the theory works when under stress.0 -
bostonerimus wrote: »Once you give up the idea of “having and edge” and trying to find funds or stocks to make you a quick profit you will be able to relax and let general economic growth and compounding meet your financial goals.
Those things are not as easy to lock into any more though?0 -
Thrugelmir wrote: »In 1990 the Nikkei 225 lost over 40% in a year , and has never recovered since. To say markets always recover is therefore factually incorrect. The big loser in the UK were those that held endowment policies to repay their mortgages. As investment returns suffered.
Hence why bonds have historically been considered key to diversify portfolios. In the eventuality that such an event occurs. 100 year market averages hide a multitude of sins.
I would question the significance of the Japanese crash as being that relevent to most endowment policies as people generally at that time would be highly invested in the UK. A Japanese fund would be seen as somewhat esoteric.
What happened to the Japanese markets is a valuable warning to investors. However it would be far less likely to happen and would not be a serious problem for investors generally now that markets and people's portfolios are truly global. Were it to happen on a global basis it would be one of those situations where our investments would be the least of our problems.0 -
You are correct, see bottom of page 69 and top of page 70. Regarding something like VLS100 and similar funds, they invest in markets all over the world not just one county. So the chances something like that will be worth less in 20 years than it is now, especially if you reinvest the dividends for those 20 years is fairly unlikely, but not impossible.JustAnotherSaver wrote: »I'm pretty sure it was the Japanese market that Kroijer mentioned. I could be wrong on the country though.0 -
I would question the significance of the Japanese crash as being that relevent to most endowment policies as people generally at that time would be highly invested in the UK.
Friends Provident started buying into Japanese stocks in the late 70's. Once foreign ownership on a nominee basis was allowed. If I recall correctly we used Extel at the time.
While easy to be dismissive now. Japan was the place to invest then. Electronics, cars, banking led the world. Post war reconstruction catapulted Japan far ahead of other economies..
Amazon, Netflix etc are todays darlings. How long for who knows.0
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