AyG
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Post by AyG on Jan 10, 2018 6:52:36 GMT 7
A part of the answer must lay in relative strength It's not clear what you mean by this. Lindsell Train Global costs me 0.75% whereas Fundmith costs 1.43%, both broadly similar funds with a similar geographic spread If I recall correctly, you use Transact. The charge for Fundsmith Equity Class I there is 0.96%. I presume that you bought the R class, which is 1.56% or 1.58%. It would be worth your while selling and repurchasing to get the reduced charge.
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chiangmai
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Post by chiangmai on Jan 10, 2018 9:29:14 GMT 7
A part of the answer must lay in relative strength It's not clear what you mean by this. Lindsell Train Global costs me 0.75% whereas Fundmith costs 1.43%, both broadly similar funds with a similar geographic spread If I recall correctly, you use Transact. The charge for Fundsmith Equity Class I there is 0.96%. I presume that you bought the R class, which is 1.56% or 1.58%. It would be worth your while selling and repurchasing to get the reduced charge. It was too early in the morning, apparently! I intended to write relative value, not relative strength. Thanks for the feedback re.Fundsmith, I shall look into this. I've just fed my portfolio(s) details into Trustnet (TN) to get their forensic view on funds that I hold, it's a very useful tool. The good news is that my analysis skills are not totally out of wack and my spreadsheet is mostly correct. TN and I agree on asset allocation and also on risk levels, both of which is good. But we are seriously at odds over the amount of fixed interest I hold and also on the geographical spread, I have some work to do to understand the gaps. But the very good news is that TN says returns on my two portfolios YTD are 16.6% and 17.3%
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chiangmai
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Post by chiangmai on Jan 10, 2018 9:36:01 GMT 7
Re. Fundsmith: I bought Class R where the OCF is 1.05% but the FCA sheet suggests there is a transaction cost of 0.37% also. I shall investigate.
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Post by rgs2001uk on Jan 10, 2018 21:15:36 GMT 7
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chiangmai
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Post by chiangmai on Jan 11, 2018 8:11:37 GMT 7
I don't have a problem with them either, but until I ask the question I have no idea what is reasonable and what is not. When it comes to paying fees for anything, I like to feel comfortable I'm paying the going rate, I don't want the cheapest deal in town but I also don't want to end up paying 50% or more than the accepted going rate, for anything.
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Post by rgs2001uk on Jan 11, 2018 20:16:40 GMT 7
^^^ ![LOL](//storage.proboards.com/6207754/images/7WqwXnsEcase2oKDoa3y.png) , beleive me, I share your concerns, I hate parting with my hard earned as much as the next guy. As for the financials, I lump them in the same category as bankers, lawyers and estate agents.
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chiangmai
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Post by chiangmai on Jan 13, 2018 5:50:47 GMT 7
Just got done putting all my investment details into Trustnet (TN) and am trying to understand the results - my FE risk score is 69 which seems quite reasonable to me, I would have guessed that at 60/40 I am pretty much balanced. Yet TN tells me my portfolio is higher than aggressive, in fact both portfolio's are and I'm trying to understand how that fits with my risk score. I think that cautious, balanced aggressive refers to the blend of asset types whereas the risk score rates each fund for risk in terms of asset content and investment style, yes, no, ? And how can it be that an investment in Japanese equities for example is higher risk than an investment in say US or UK equities? Does this assume a baseline western home base or currency because if not, I fail to see how it can be higher risk. So many questions, so little time ![(rofl)](//storage.proboards.com/forum/images/smiley/rofl.png)
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AyG
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Post by AyG on Jan 13, 2018 9:29:41 GMT 7
Yet TN tells me my portfolio is higher than aggressive I'm not sure where you're seeing this. However, there are a number of factors that might possibly be involved: (1) The bonds you're holding aren't conventional bonds, but index linked, so don't fit into the traditional 60/40 model. (2) You are investing overseas which introduces foreign exchange risk. (3) You are investing in emerging markets. (4) You are investing in small cap shares. (5) You are investing in VCTs. (6) You are not holding sufficient cash/cash equivalents. Incidentally, you should be combining all your portfolios for analytical purposes. This will give a much better perspective of your exposure and risks. Finally, these tools are really little more than a gimmick. They are only applicable to individuals living in the UK, and they are based upon a very dated, UK-centric view of the world. (As I've said before, it's irrational to assume that one's home market will perform better than all the others just because one happens to live in a particular country.) Your FE Risk Score is rather more scientifically based upon the mean volatility of the individual components based upon historic data. However, it can't take into account what will happen in the future, and if the future is radically different from the past (e.g. there's a market crash, or a steep rise in inflation/interest rates) the Risk Score may be significantly under or over stating the risks you're taking on.
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chiangmai
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Post by chiangmai on Jan 15, 2018 14:18:09 GMT 7
Yet TN tells me my portfolio is higher than aggressive I'm not sure where you're seeing this. However, there are a number of factors that might possibly be involved: (1) The bonds you're holding aren't conventional bonds, but index linked, so don't fit into the traditional 60/40 model. (2) You are investing overseas which introduces foreign exchange risk. (3) You are investing in emerging markets. (4) You are investing in small cap shares. (5) You are investing in VCTs. (6) You are not holding sufficient cash/cash equivalents. Incidentally, you should be combining all your portfolios for analytical purposes. This will give a much better perspective of your exposure and risks. Finally, these tools are really little more than a gimmick. They are only applicable to individuals living in the UK, and they are based upon a very dated, UK-centric view of the world. (As I've said before, it's irrational to assume that one's home market will perform better than all the others just because one happens to live in a particular country.) Your FE Risk Score is rather more scientifically based upon the mean volatility of the individual components based upon historic data. However, it can't take into account what will happen in the future, and if the future is radically different from the past (e.g. there's a market crash, or a steep rise in inflation/interest rates) the Risk Score may be significantly under or over stating the risks you're taking on. Apologies for the late reply but we've been away for a few days. I think your reply above probably answers most of the risk based questions: Index-linked bonds, check. Investing overseas, check. Emerging markets and small caps, check (the latter to a lesser degree however). VCT's, no. Low cash, check. Re: portfolio higher than aggressive: it may well be a gimmick but one you enter details of a portfolio into Trustnet it breaks down the contents and presents it back to you, details of holdings, regions, asset type etc., it's a sort of Morningstar X-ray facility. One of the areas TN reports on is your portfolio versus a low risk, balanced and aggressive portfolio average and both of mine came up higher than aggressive. But there are some obvious things wrong with the facility, one being that it is unable to allocate some 40%+ of my holdings to anything other than "other"! Once I get over my drive I'll get back into it and see what I can fathom, in the meantime, many thanks for your feedback on the above, as always it's much appreciated.
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Post by rgs2001uk on Jan 15, 2018 21:06:03 GMT 7
Just got done putting all my investment details into Trustnet (TN) and am trying to understand the results - my FE risk score is 69 which seems quite reasonable to me, I would have guessed that at 60/40 I am pretty much balanced. Yet TN tells me my portfolio is higher than aggressive, in fact both portfolio's are and I'm trying to understand how that fits with my risk score. I think that cautious, balanced aggressive refers to the blend of asset types whereas the risk score rates each fund for risk in terms of asset content and investment style, yes, no, ? And how can it be that an investment in Japanese equities for example is higher risk than an investment in say US or UK equities? Does this assume a baseline western home base or currency because if not, I fail to see how it can be higher risk. So many questions, so little time ![(rofl)](//storage.proboards.com/forum/images/smiley/rofl.png) Are you happy with your portfolio? if the answer is yes, then forget it. Sounds like one of those jobsworth box ticker type one size fits all reports. TN, is just one persons opinion, look at the contributors to this thread, you cant take a one size fits all template and expect us all to be happy. I will be honest, I have no clue what a risk score, or aggressive means, but have been through the same BS with stockbroker, fill in this jobsworths form, results come back, aggressive. I dont hold gold, crypto currencies or effin magic beans. Explained to stockbroker, you dont know shit about my portfolio, you only know about what I have invested with you. But while we are at it, please explain why Alliance Trust doesnt send me this BS, NSI doesnt send me this BS, my Thai doesnt send me this BS, in short , you dont have a clue what my overall portfolio is and what its worth. I also asked him if there was an UNSUBSCRIBE box I can tick, I dont need a effin printout of my investment, I dont need 3 monthly updates blah blah. There would appear to be a whole substrata of financial BS mushoroming these days, no wonder charges are rising to comply with TIN OECD BS, smartsave crap, pls provide at your own expense your details to prove to us you are actually who you claim to be. Phoned the stockbroker the other week, asked him, when will this BS stop, he apologised and told me to ignore it, another BS letter shotgunned to all account holders.
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Post by rgs2001uk on Jan 15, 2018 21:34:52 GMT 7
The latest BS coming your way.
Markets in Financial Instruments Directive II(MiFID II) We wrote to you a couple of months ago about new regulations that will become effective on 3 January 2018. I thought it would be helpful to update you on our implementation plans and what these new regulations will mean in practice. There are 5 main objectives within the new regulations – strengthening investor protection and reducing the risks of a disorderly market are perhaps the two that will have the most impact on our clients. Asyou would expect with one of the biggest regulatory changes in the last 15 years, we put together a project team comprising many areas of our business toensure thatoursystems andprocesses arefullycompliant. The main areas where youmay seechanges are:
1. Transaction Reporting. Following every trade and transfer that we carry out for you we report details to our regulator – the Financial Conduct Authority. This is primarily to counter market abuse and insider dealing. The reporting regime has now been extended as we have to report every transfer (including gifts between spouses) and all corporate actions involving an election or choice as regards an outcome. We are required to report the outcome as regards decision-taker and beneficial owner. For entities such as charities, trusts and companies, MIFID II has introduced a new client reference called a legal entity identifier (LEI). For individuals we arerequired toreport theappropriate NationalInsurance number. If you have not yet responded to previous correspondence as regards an LEI or a National Insurance number please do so immediately as without this information we will not be able to manage your portfolio, advise, undertaketransactions ormake transfers.We arevery keen toavoidsuchasituationarising. 2. Client Reporting. All clients must now receive a quarterly report – something which we have already introduced. 3. Notifying a material fall in value for discretionary clients. In the event that the value of your portfolio fallsby10%or moreduring a3monthperiod we willnow specificallywrite toinform youofthis. 4. Best execution. We have updated our Order Execution Policy and this is published on our website. This policy describes how we execute deals on your behalf and what factors we deem to be of importance in delivering best execution on a consistent basis. We will also show information on our website which describes thetop5execution venues by instrument type. This willbe displayed from April2018 onwards.
5. Telephone recording. The new regulations require us to record telephone calls and retain these recordings for 5 years. We reserve the right to monitor calls to ensure that we continue to provide a high quality service to you. We may also be required to disclose these callsto the appropriate regulatory authorities upon request.Aswith allconfidentialinformation we receivethis will notbe sharedwith anyotherparties. 6. Client classification. We will continue to classify you as a Retail Client. This affords you the greatest degreeofinvestor protection. 7. Research. X&X will source investment research from trusted companies and this will be paid by us – we will not levy any charge on you. Our own internal research department will continue to provide detailed information toour investment managers toassistthemin managing clientportfolios. If you have any questions about MiFID II please refer to the frequently asked questions on our website in the first
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chiangmai
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Post by chiangmai on Jan 16, 2018 2:44:00 GMT 7
Just got done putting all my investment details into Trustnet (TN) and am trying to understand the results - my FE risk score is 69 which seems quite reasonable to me, I would have guessed that at 60/40 I am pretty much balanced. Yet TN tells me my portfolio is higher than aggressive, in fact both portfolio's are and I'm trying to understand how that fits with my risk score. I think that cautious, balanced aggressive refers to the blend of asset types whereas the risk score rates each fund for risk in terms of asset content and investment style, yes, no, ? And how can it be that an investment in Japanese equities for example is higher risk than an investment in say US or UK equities? Does this assume a baseline western home base or currency because if not, I fail to see how it can be higher risk. So many questions, so little time ![(rofl)](//storage.proboards.com/forum/images/smiley/rofl.png) Are you happy with your portfolio? if the answer is yes, then forget it. Sounds like one of those jobsworth box ticker type one size fits all reports. TN, is just one persons opinion, look at the contributors to this thread, you cant take a one size fits all template and expect us all to be happy. I will be honest, I have no clue what a risk score, or aggressive means, but have been through the same BS with stockbroker, fill in this jobsworths form, results come back, aggressive. I dont hold gold, crypto currencies or effin magic beans. Explained to stockbroker, you dont know shit about my portfolio, you only know about what I have invested with you. But while we are at it, please explain why Alliance Trust doesnt send me this BS, NSI doesnt send me this BS, my Thai doesnt send me this BS, in short , you dont have a clue what my overall portfolio is and what its worth. I also asked him if there was an UNSUBSCRIBE box I can tick, I dont need a effin printout of my investment, I dont need 3 monthly updates blah blah. There would appear to be a whole substrata of financial BS mushoroming these days, no wonder charges are rising to comply with TIN OECD BS, smartsave crap, pls provide at your own expense your details to prove to us you are actually who you claim to be. Phoned the stockbroker the other week, asked him, when will this BS stop, he apologised and told me to ignore it, another BS letter shotgunned to all account holders. I don't care about the so called jobsworth stuff, I'm far more interested in understanding the different dimensions of managing a portfolio from a profitability and risk standpoint, not necessarily in that order. You have the luxury of a broker between you and your actions, he no doubt will advise if you feel inclined to do something unconventional, I don't have that luxury hence my need to understand as much as I can on the subject - you also have considerably more experience in the area of investing than I do hence I'm starting from a position much further behind than you. I am used to working on the basis of risk assessments and of assessing risk, that has been a mainstay of my work for years and I'm a big believer in listening to the messages the risk process delivers. The disadvantage I have at this stage is that I don't yet fully understand all of the investment risk languages so I'm not able to completely translate all the risk messages I'm receiving. There are three levels, cautious, balanced and aggressive, ask me which level I want to be at and I will say balanced - it, therefore, comes as a surprise when I find out I'm higher than aggressive. But AyG has put that into perspective by confirming that it's based on investment type and geographic spread, both of which are intentional and desirable - another leaning block ticked and understood. Risk Levels: I really don't want to put myself in a high-risk box, I'm pushing 70, why would I do that. So understanding the basis for an FE risk score is essential and once again AyG has put that into perspective, it's a historic view of volatility which may be a useful indicator going forward and there again it may not be useful but in the absence of any other tools, it's going to get utilised. A Risk Score: of 100, equals the risk associated with the FTSE, what is that, the average risk of the FTSE one presumes - unless that is put into some kind of context it's got the potential to be a bit like saying a Model 251 nuclear bomb is an average nuclear weapon! Back on jobsworth stuff for a moment. I got my first copy of the required FCA quarterly report last week and it was helpful, it told me a series of things I hadn't previously understood so my advice would be for everyone to read theirs. It told me about charging in detail, some of which I need to dig into further to understand properly, it also put growth versus charging into perspective, useful I think. Again, this is all about where a person is on the learning curve and I'm still quite a ways down hence I'm going to utilise everything I can understand until I find I can discard it as a tool. It's not really enough for me to ask, am I happy with the portfolio and if so, forget it. If this was a garden shed I'd just built I might be able to take that approach but it isn't, its something far more complex and involved and I'm not quite there yet with enough aspects of it to feel comfortable.
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chiangmai
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Post by chiangmai on Jan 20, 2018 7:34:28 GMT 7
It seems to me there may be advantages, in my case, to not holding individual managed funds but instead holding a series of global iShares funds, my logic is this:
Trying to get the right geographic coverage and risk level across ten or so funds (x 2) is very difficult, it's time-consuming and quite hard to achieve and maintain since the picture is continuously evolving.
Switching individual funds incurs a buying cost of 0.80%, in addition to the platform and non-advised surcharge, 0.50% and 0.44% per annum respectively.
The ongoing cost to hold funds is not always inexpensive, up to 1.50% per year in the case of some of my funds (0.91% overall average), iShares tend to be very inexpensive to hold.
There's a lot of controversy surrounding the effectiveness of managed versus trackers so the correct answer depends on your personal view, some say it's 50/50, others say trackers win over 80% of the time, others say that if you pick your managed fund with care you'll outperform the tracker 90% of the time, who knows what the real answer is.
One thing is for sure however and that is a tracker will never outperform the index by more than a few basis points, a compelling argument in favour of managed funds - but over a ten year period, the odds appear to strongly favour the success of trackers, unless of course you're a pro.
Another compelling point is the lack of downside protection that trackers afford, there isn't any, managed funds do however offer some hope that an active, alert and nimble fund manager can help minimise losses - my jury is out on this point.
Asset Allocation: there seems to be little difference between the two types on this point, as far as I can tell.
Finally, timing: there's probably a time to buy into tackers and a time not to, I reckon that now is probably not good since markets are at record highs. But after the next fall/crash, a tracker portfolio seems to be a decent way to go in terms of cost, results, geographic coverage/risk and continuity of results.
Anyone have thoughts on the above?
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AyG
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Post by AyG on Jan 20, 2018 9:22:05 GMT 7
Switching individual funds incurs a buying cost of 0.80%, in addition to the platform and non-advised surcharge, 0.50% and 0.44% per annum respectively. The 0.8% figure looks odd to me. Transact charges 0.05% on asset purchases, and nothing on sales. A 0.5% platform charge is steep, and the non-advised surcharge unfortunate and avoidable. The obvious solution would be to switch to a different platform. Fletch is a great fan of Hargreaves Lansdown. They charge 0.45% for a portfolio of your size. I prefer something cheaper and use Interactive Investors for my onshore holdings. They charges a flat GBP 90/year. The service isn't great, though. Other options reviewed at www.boringmoney.co.uk/best-buys/online-investments/Transact does not charge for transfer out of securities, and most platforms don't charge for transfer in. (I've assumed you're UK resident. Offshore I use Internaxx which charges a maximum of €190/year - significantly less if you trade at least once each quarter.)
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AyG
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Post by AyG on Jan 20, 2018 9:58:55 GMT 7
There's a lot of controversy surrounding the effectiveness of managed versus trackers so the correct answer depends on your personal view, some say it's 50/50, others say trackers win over 80% of the time, others say that if you pick your managed fund with care you'll outperform the tracker 90% of the time, who knows what the real answer is. If you look at the pro-tracker argument it starts by comparing the performance of trackers with a sector average of fund managers. And let's admit it, there are a lot of mediocre fund managers out there, and high fund charges are a drag on performance. However, to me this is intellectually dishonest and hides the fact that there are some very capable fund managers out there who can outperform a benchmark for years and years (albeit with an occasional slip). Here are charts of a couple of investment trusts I've held for over a decade (and otherwise picked at random from my holdings). The first is Max Ward's IIT compared with Vanguard FTSE U.K. All Share Index A Acc GBP. The second is Francesco Conte's JESC compared with DB X-Trackers MSCI Europe Small Cap Index UCITS ETF (DR) 1C GBP. Attachment DeletedAttachment DeletedIt does take a little bit of research to identify the better fund managers, but if you only need to do so once every decade or two it's hardly onerous. I'm not so lazy that I'm prepared to accept tracker like performance where outperformance is possible. (It is not possible in my opinion in some markets, most notably bonds, and possibly US large cap equities. My index-linked gilts and TIPS holdings are both ETFs.) For someone who's too lazy to do the research, then I'd suggest putting everything on red at Monte Carlo into Vanguard LifeStrategy 80% Equity Fund and be done with it. (It is a very good product in many ways.) Just for interest, here's how it's performed (C) against the two investment trusts mentioned above: Attachment DeletedAnd one final point: trackers are required to hold companies good and very obviously bad and about to crash and burn. Active fund managers aren't.
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