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  • FIRST POST
    • Filo25
    • By Filo25 9th Jan 18, 11:27 AM
    • 1,502Posts
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    Filo25
    A question for those who are at least partially Active investors
    • #1
    • 9th Jan 18, 11:27 AM
    A question for those who are at least partially Active investors 9th Jan 18 at 11:27 AM
    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!
Page 1
    • chrisgg
    • By chrisgg 9th Jan 18, 12:26 PM
    • 61 Posts
    • 52 Thanks
    chrisgg
    • #2
    • 9th Jan 18, 12:26 PM
    • #2
    • 9th Jan 18, 12:26 PM
    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
    • By Prism 9th Jan 18, 1:32 PM
    • 357 Posts
    • 275 Thanks
    Prism
    • #3
    • 9th Jan 18, 1:32 PM
    • #3
    • 9th Jan 18, 1:32 PM
    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
    • By Linton 9th Jan 18, 1:37 PM
    • 9,394 Posts
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    Linton
    • #4
    • 9th Jan 18, 1:37 PM
    • #4
    • 9th Jan 18, 1:37 PM
    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
    • By BananaRepublic 9th Jan 18, 3:16 PM
    • 1,192 Posts
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    BananaRepublic
    • #5
    • 9th Jan 18, 3:16 PM
    • #5
    • 9th Jan 18, 3:16 PM
    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
    • By darkidoe 28th Jan 18, 1:32 AM
    • 927 Posts
    • 1,075 Thanks
    darkidoe
    • #6
    • 28th Jan 18, 1:32 AM
    • #6
    • 28th Jan 18, 1:32 AM
    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.
    Originally posted by Linton
    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
    • By bostonerimus 28th Jan 18, 3:32 AM
    • 1,933 Posts
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    bostonerimus
    • #7
    • 28th Jan 18, 3:32 AM
    • #7
    • 28th Jan 18, 3:32 AM
    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.
    Originally posted by darkidoe
    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.
    Misanthrope in search of similar for mutual loathing
    • firestone
    • By firestone 28th Jan 18, 9:18 AM
    • 246 Posts
    • 106 Thanks
    firestone
    • #8
    • 28th Jan 18, 9:18 AM
    • #8
    • 28th Jan 18, 9:18 AM
    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
    • By BananaRepublic 28th Jan 18, 9:52 AM
    • 1,192 Posts
    • 874 Thanks
    BananaRepublic
    • #9
    • 28th Jan 18, 9:52 AM
    • #9
    • 28th Jan 18, 9:52 AM
    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.
    Originally posted by bostonerimus
    Thatís 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
    • By TBC15 28th Jan 18, 10:19 AM
    • 491 Posts
    • 250 Thanks
    TBC15
    Thatís 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.
    Originally posted by BananaRepublic
    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
    • By economic 28th Jan 18, 11:07 AM
    • 2,940 Posts
    • 1,586 Thanks
    economic
    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.
    • BananaRepublic
    • By BananaRepublic 28th Jan 18, 11:51 AM
    • 1,192 Posts
    • 874 Thanks
    BananaRepublic
    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.
    Originally posted by TBC15
    Motley Fool was one of the sirens whose sweet calls pulled me off course.
    • Prism
    • By Prism 28th Jan 18, 11:56 AM
    • 357 Posts
    • 275 Thanks
    Prism
    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.
    Originally posted by economic
    Interesting, one of the reasons that I picked Fundsmith is because its not a growth fund like so many of the top performers are. Morningstar class it in the global blended category. Some of its holdings are clearly growth like Paypal, others are both growth and value like Microsoft and then you have stocks like Johnson & Johnson which is value. There is more of a growth bias than value overall but there is certainly a mix. Saying that, I don't imagine the concept of growth or value stocks really apply to its investment style. Todays value is tomorrows growth and vice versa.

    Its 5 year volatility is pretty much the same as a S&P 500 tracker - 10.9 vs 10.2. Considering it only has 30 stocks I would say thats fairly reliable. Its probably the fund that I own that I worry about the least.
    • Prism
    • By Prism 28th Jan 18, 12:07 PM
    • 357 Posts
    • 275 Thanks
    Prism
    Thatís 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.
    Originally posted by BananaRepublic
    Very true. If you decide to avoid the FTSE 100 and look a bit futher down the index at the FTSE 250 or towards small caps you would very likely not want to use a passive tracker. For example, over the last 3, 5 and 10 years the FTSE 250 trackers pretty much sit at bottom of the UK mid cap category. Its a similar story for small caps.

    My suggestion would never use a passive fund for the UK market and unless the FTSE 100 somehow turns itself around this is unlikely to change.
    • username12345678
    • By username12345678 28th Jan 18, 12:28 PM
    • 215 Posts
    • 111 Thanks
    username12345678
    Passive

    US
    Japan
    Pharma

    (Considering EM MinVol ETF)
    • economic
    • By economic 28th Jan 18, 12:46 PM
    • 2,940 Posts
    • 1,586 Thanks
    economic
    Interesting, one of the reasons that I picked Fundsmith is because its not a growth fund like so many of the top performers are. Morningstar class it in the global blended category. Some of its holdings are clearly growth like Paypal, others are both growth and value like Microsoft and then you have stocks like Johnson & Johnson which is value. There is more of a growth bias than value overall but there is certainly a mix. Saying that, I don't imagine the concept of growth or value stocks really apply to its investment style. Todays value is tomorrows growth and vice versa.

    Its 5 year volatility is pretty much the same as a S&P 500 tracker - 10.9 vs 10.2. Considering it only has 30 stocks I would say thats fairly reliable. Its probably the fund that I own that I worry about the least.
    Originally posted by Prism
    Yes my mistake what i meant was that Fundsmith is mostly in growth but thats not that much more then a tracker i suppose.

    He has done well over the last 5 years to outperform by a wide margin and keep volatility the same as the S&P. But 5 years is not much of a track record either. I would not feel safe to have most funds with fundsmith but i have allocated some to him which i am comfortable with. I also have limits to how much exposure i am willing to take to a particulary company and having all my funds with fundsmith would breach that limit quite easily.
    • ArchBair
    • By ArchBair 1st Feb 18, 10:55 AM
    • 95 Posts
    • 34 Thanks
    ArchBair
    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.
    Originally posted by Prism
    Would you mind me asking what other active funds you have in your portfolio apart from Fundsmith, Legg Mason Japan, Jupiter India and the Polar Robotics fund?
    • Prism
    • By Prism 1st Feb 18, 12:34 PM
    • 357 Posts
    • 275 Thanks
    Prism
    Would you mind me asking what other active funds you have in your portfolio apart from Fundsmith, Legg Mason Japan, Jupiter India and the Polar Robotics fund?
    Originally posted by ArchBair
    I have a fairly large holding in Old Mutual UK Mid Cap. This is the one my pension contributions go into each month as the platform its in doesn't cost to trade. Then once a year I transfer some from that into my SIPP. In addition to those funds above I also have Baillie Gifford Global Discovery which covers my small caps. I have Fundsmith FEET and Baillie Gifford Greater China for EM. Oh, and I small gold miners fund which I am thinking of selling as I am not convinced inflation is ever coming back as strong as the past.
    • OldMusicGuy
    • By OldMusicGuy 1st Feb 18, 1:05 PM
    • 397 Posts
    • 780 Thanks
    OldMusicGuy
    I am 23% cash, 27% active (dividend income focus) and 50% passive multi-asset funds. I am 60, retiring in 4 weeks. Suits my objectives but I couldn't say if it would suit anyone else's.
    • ColdIron
    • By ColdIron 1st Feb 18, 1:20 PM
    • 4,256 Posts
    • 5,385 Thanks
    ColdIron
    I am 60, retiring in 4 weeks
    Originally posted by OldMusicGuy
    Congratulations!
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