AyG
Crazy Mango Extraordinaire
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Post by AyG on Jul 11, 2019 10:24:25 GMT 7
A while back now I sold my holding of Aberdeen New Thai (investment trusts) since over a number of years it had failed to beat the index. I moved the proceeds to Thailand given that there were funds here which appeared at the time fairly consistently to beat the index. I couldn't manage to choose just for one, so split the money three ways: Tisco Strategic, Krung Sri Dynamic, Krung Thai Smart Equity. (All have slightly different styles.) I expected them to continue to outperform. I was wrong. Year to date the Tisco fund has underperformed the benchmark by 0.9%, Krung Sri by a shocking 7.5%, and Krung Thai by 3%. For comparison I looked at UOB's Corporate Governance fund which at least one poster here favours. It's underperformed by 1.7%. This chart (for the Krung Thai fund) is fairly typical: years of out performance, then a serious decline. Attachment DeletedWhy is it that active management has recently failed to deliver recently – and it's not just one fund, but all four? |
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Post by eldivino on Jul 12, 2019 9:35:52 GMT 7
Isn’t it the case that most actively manages funds lose against the market, in particular when the market becomes more mature? I only buy actively managed funds for the tax benefit, hoping that those X% provide enough safety margin. The rest goes into boring ETF.
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AyG
Crazy Mango Extraordinaire
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Post by AyG on Jul 12, 2019 10:42:14 GMT 7
Isn’t it the case that most actively manages funds lose against the market, in particular when the market becomes more mature? I only buy actively managed funds for the tax benefit, hoping that those X% provide enough safety margin. The rest goes into boring ETF. Unfortunately, a lot of misinformation has been spread about passive management - a lot of it coming from the Vanguard stable who have a vested interest in hyping ETFs. It's true that in some markets the average actively managed fund underperforms the index. But what sort of person is too stupid or too lazy to invest in an average fund? One should seek out the best fund managers. A few markets are so efficient that it's virtually impossible for an active manager to outperform. These markets include US large cap stocks, and many bond markets where ETFs can make sense. The SET is not one of these markets. Indeed, if one's willing to accept and act upon insider information, one can do very well (or end up in prison)*. As an example, looking at the following chart, why would anyone want to invest in a FTSE-100 ETF when they could invest in Lindsell Train UK Equity fund. Over 10 years the later has returned three times as much as the former - and with similar volatility. Attachment DeletedI rather suspect that ETFs appeal to financial advisers so they can say to disgruntled clients that they've matched the market, rather than underperforming by poor selection of funds. * Only joking about "end up in prison". Prison in Thailand (like taxes) is only for the little people; the wealthy are immune. |
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Post by eldivino on Jul 12, 2019 11:41:21 GMT 7
Isn’t it the case that most actively manages funds lose against the market, in particular when the market becomes more mature? I only buy actively managed funds for the tax benefit, hoping that those X% provide enough safety margin. The rest goes into boring ETF. But what sort of person is too stupid or too lazy to invest in an average fund? If it was that easy to find the few actively managed funds that regularly outperform the market, wouldn’t everyone buy them? I wouldn’t call myself lazy or stupid, but I don’t know how to find those funds given the limited amount of time I have after work. Sounds a bit like stockpicking to me. I might be wrong, of course. |
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Post by rgs2001uk on Jul 12, 2019 21:06:12 GMT 7
But what sort of person is too stupid or too lazy to invest in an average fund? If it was that easy to find the few actively managed funds that regularly outperform the market, wouldn’t everyone buy them? I wouldn’t call myself lazy or stupid, but I don’t know how to find those funds given the limited amount of time I have after work. Sounds a bit like stockpicking to me. I might be wrong, of course. Begs the question, why are you investing in Thailand and not overseas? |
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AyG
Crazy Mango Extraordinaire
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Post by AyG on Jul 12, 2019 21:08:14 GMT 7
If it was that easy to find the few actively managed funds that regularly outperform the market, wouldn’t everyone buy them? I wouldn’t call myself lazy or stupid, but I don’t know how to find those funds given the limited amount of time I have after work. Sounds a bit like stockpicking to me. I might be wrong, of course. Just a thought, but have you ever bought a car? How many hours did you spend researching the various options? And that's for something that in a few years will have lost almost all its value. How much more important is it to spend time researching something that will potentially grow your wealth over decades? Your comparison with stock picking is sort of fair. However, if you pick stock not only do you need to spend several hours researching the company, you also need to monitor the company regularly in perpetuity. Not something I'm into. That's why I pay fund managers to do the hard work for me. Picking a fund is in some ways easier in that if you pick an excellent fund manager, then the chances are they'll continue to outperform in the longer term. Monitoring every year or two usually works out fine. That said, I don't think I've ever seen a book that recommends how to pick an excellent fund manager. At least, I've never bought or read such a book (and I have dozens of investment-related books on the shelf). Key things I now look for are: - Not being a closet tracker (i.e. having investments different from the index) - Low turnover (i.e. having a clear vision and not wasting money on repeatedly buying and selling stocks) - Focus on quality stocks - A small portfolio (i.e. conviction in a small number of stocks) - Relatively low fees - A complete avoidance of any sort of long/short fund or use of significant leverage or use of derivatives. |
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Post by Fletchsmile on Jul 13, 2019 17:30:51 GMT 7
A while back now I sold my holding of Aberdeen New Thai (investment trusts) since over a number of years it had failed to beat the index. I moved the proceeds to Thailand given that there were funds here which appeared at the time fairly consistently to beat the index. I couldn't manage to choose just for one, so split the money three ways: Tisco Strategic, Krung Sri Dynamic, Krung Thai Smart Equity. (All have slightly different styles.) I expected them to continue to outperform. I was wrong. Year to date the Tisco fund has underperformed the benchmark by 0.9%, Krung Sri by a shocking 7.5%, and Krung Thai by 3%. For comparison I looked at UOB's Corporate Governance fund which at least one poster here favours. It's underperformed by 1.7%. This chart (for the Krung Thai fund) is fairly typical: years of out performance, then a serious decline. Why is it that active management has recently failed to deliver recently – and it's not just one fund, but all four? Not sure where you got those 3 funds from? Tisco Strategic, Krung Sri Dynamic, Krung Thai Smart Equity.
Nor why you expected them to outperform?
Were they just funds that happened to be above average based on historic performance at the time you were looking?
After following Thai equities and funds for the best part of 20 years, they're not funds that would make it on to my buy last. I've rarely seen them in the Top 5.
Tisco generally isn't a great name in Finance, nor is Krung Thai. Neither are fund management houses that come to mind if thinking about Thailand's best. Tisco as a group is good for auto-finance, but as an investment house is old fashioned and has fallen way behind, like the bank. Same for Krung Thai with its old fashioned style and the group still controlled by the government - probably Ok for credit cards. So they don't surprise me at all.
Krung Sri is better, though and they do have some decent funds among their range.
If looking for active management - Names to look for really are UOB, Bualuang, One Asset Management, MFC and selectively some of the Krungsri funds.
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Good move in getting rid of Aberdeen New Thai investment trust. The discount to NAV history on it has been ridiculous, accentuating volatility in the funds uneccessarily. Performance has been mediocre, and then there's been Aberdeen's issues generally. Not to mention liquidity and volume issues if someone wants to buy reasonable amounts.
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Post by Fletchsmile on Jul 13, 2019 17:44:01 GMT 7
For comparison I looked at UOB's Corporate Governance fund which at least one poster here favours. It's underperformed by 1.7%. Why is it that active management has recently failed to deliver recently – and it's not just one fund, but all four? Not quite sure what data you're looking at. But as we know all active funds can have times were they underperform the market
For UOB GCG it sounds more like a timing issue of the dates you've picked over a shorter to mid time frame.
If you looked at the most recent "Fund Information Sheet" for UOB GCG as per their website. It's dated 31 May 2019
On that fund information sheet, as at 31 May 2019, UOB outperformed SET TRI over 5 years and 10 years
If you look at this thread from about 2 years back, you'll see UOB clearly in the Top 10 yet again, as well as being ahead of the index over 10 years.
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Post by Fletchsmile on Jul 13, 2019 17:54:16 GMT 7
Why is it that active management has recently failed to deliver recently – and it's not just one fund, but all four? 2018 was also a bad year for most active fund managers in Thailand. They seem to have been wrong footed, as happens from time to time - likely this time by Q4 reversals globally.
Add to that: One of the problems they've faced in the last 5 years is that the SET generally also hasn't done much and returns have been weak for the Thai stock market as a whole
SET TRI is up just over 6% annualised in the last 5 years, compared to over 15% annualised in the last 10 years.
In years where total index return is meagre in the Thai equity market, anything that charges fees finds it tougher than an index without fees.
So a bad year for last year, on top of a generally weak market for the last few years.
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