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Post by realisedurgency on Oct 18, 2020 12:46:22 GMT 7
Chiangmai There is a massive difference between popular fund managers and well-regarded fund managers. The FE Alpha Managers are selected based upon performance, not popularity (though there is some overlap between the two categories). Anyway, the reason I'm posting here (which I'd kind of promised myself I wouldn't do) is a Trustnet article today "The warning signs that your top performing fund is at its peak". Plenty of food for thought there. For example “Funds charge their fees as a percentage of the size of the fund; their mission is to earn more by growing more. And this is easiest achieved by convincing investors to keep buying”.and “What is the balance [on the website] between the photos of your star manager and meaningful facts about the fund? The right mix is roughly 1-99 per cent.”www.trustnet.com/news/5053068/the-warning-signs-that-your-top-performing-fund-is-at-its-peak “I much prefer to buy and hold managers who invest in businesses rather than try and trade positions,” he added. “When a fund portfolio starts seeing an unusually high level of turnover, it might be an indication that the manager lacks conviction or is being too influenced by short term market noise.”
“When a popular, once stellar performing fund starts changing its approach, that really is a sign to reappraise the case for holding it and the textbook example here is the now infamous Woodford Equity Income Fund,”The article is certainly food for thought. Applying some of it to the Baillie Gifford ITs I hold I'm not sure how worried I should be? Scottish Mortgage is certainly a hot performer and maybe people are jumping on that bandwagon and it could succumb to some of the pitfalls mentioned. However, I don't see any philosophy changes and the 3 ITs I hold take a buy and hold long term approach. On pictures of managers vs facts, I like the BG site and can easily find annual and mid term reports as well as monthly fact sheets. Fund managers also put out short articles and there is Trust Magazine.
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AyG
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Post by AyG on Oct 18, 2020 13:23:04 GMT 7
The article is certainly food for thought. Applying some of it to the Baillie Gifford ITs I hold I'm not sure how worried I should be? I was looking at Baillie Gifford European Growth Trust a few days ago. Here's the last three years' performance against iShares MSCI Europe ex-UK UCITS ETF GBP. Attachment DeletedI'm sure you can guess which one is BG investment trust. This sort of performance for me is an absolute show stopper. The trust has been pootling along, just about keeping up with index over the last ten years. Then, suddenly over the last few months, it has massively outperformed. This is not normal behaviour. And such rapid outperformance can quickly reverse. Because of that I would not be piling onto the bandwagon. Just to add that for most of the past three years it's traded at a 10% discount to NAV. Now it's trading close to par. I would expect it to revert to the historical discount once the current massive blip has passed. It's not just their European Growth Trust - I could write a similar story for other BG trusts and funds which have shown a similar recent outperformance. Time to stay on the sidelines, methinks.
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Post by realisedurgency on Oct 18, 2020 13:30:33 GMT 7
The article is certainly food for thought. Applying some of it to the Baillie Gifford ITs I hold I'm not sure how worried I should be? ... It's not just their European Growth Trust - I could write a similar story for other BG trusts and funds which have shown a similar recent outperformance. Time to stay on the sidelines, methinks. I have the following: Scottish Mortgage Monks Scottish American Investment Co. They all have a long track record. Scottish Mortgage does seem like it could be the most volatile of the 3.
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AyG
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Post by AyG on Oct 18, 2020 13:32:37 GMT 7
Just to demonstrate how funds can fall to earth, here's a 10 year chart of one that I have owned for almost 20 years [IIT], plotted against the FTSE 100 index. Attachment DeletedAt one point I was looking at a 700% gain on the original purchase price. I'm still happy with its performance, Over the last 10 years it's returned 10.8% annualised, which is good enough for me. I do rather regret, though, not having sold at the peak.
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chiangmai
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Post by chiangmai on Oct 18, 2020 15:57:07 GMT 7
There again, BG International over almost any period of time, 1, 5 or 10 years has out performed the index consistently and by a good margin, growth over the past six months has been very similar to many of their other funds. The implications are that either something is not quite right and normal with all BG funds or they have latched onto a highly successful investment formula that they have deployed across the board. www2.trustnet.com/Tools/Charting.aspx?typeCode=FBGII,XO:GLBLGRTH
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chiangmai
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Post by chiangmai on Oct 18, 2020 16:55:04 GMT 7
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GavinK
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Post by GavinK on Oct 18, 2020 17:48:26 GMT 7
When I read that article I think of ishares Global Clean Energy (INRG) up 78% YTD.
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AyG
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Post by AyG on Oct 18, 2020 19:32:24 GMT 7
BG Long Term Global Growth has increased 151% over the past three years and over 100% in the past twelve months Putting that differently, for two years they returned roughly 25%/year which seems pretty good, and then in one year they returned 100%. Surely that last year is exceptional and is unlikely to be repeated. their holdings of Tesla stock (8.7%) seem to be largely responsible for that growth And one wonders in what rational world Tesla is a good investment? It has a reputation for expensive, unreliable and shoddy products. And it's operating in a space in which other motor manufacturers are working hard to enter. If we remember how the Japanese motor manufacturers took over the Western truck industry, the motorbike industry and then the car industry, I am pretty confident they will do the same with the electric car market.
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chiangmai
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Post by chiangmai on Oct 18, 2020 20:01:18 GMT 7
I'm not sure that repeatability always needs to be the objective, isn't it all about spotting a rising star and buying in early, which is what BG seems to have done.
Your argument that the Tesla product is shoddy and will be usurped by the Japanese sounds like wishful thinking or sour grapes! You have to admit that Musk is pushing the envelope when it comes to creativity and turning concept into production units. His work in developing batteries has resulted in entire towns being powered by Tesla batteries and that's pretty impressive. But of course, nobody stay king of the pile forever and one day he will be usurped, but it hasn't happened yet and there doesn't seem to be anyone on the horizon either.
The bottom line from an investment point of view is that there's no reason in this world why the investment always needs to be sustainable and repeatable. We'd all take a Tesla equivalent as a one off for a year or two and then move on to something else, you yourself said you regretted not selling and taking the 100+% profit which is exactly what BG seems to be doing.
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Post by rgs2001uk on Oct 20, 2020 20:44:54 GMT 7
... It's not just their European Growth Trust - I could write a similar story for other BG trusts and funds which have shown a similar recent outperformance. Time to stay on the sidelines, methinks. I have the following: Scottish Mortgage Monks Scottish American Investment Co. They all have a long track record. Scottish Mortgage does seem like it could be the most volatile of the 3. Good man, I hold the first two, but not the third, however I also hold this, www.hl.co.uk/shares/shares-search-results/e/edinburgh-worldwide-investment-tst-ord-1p
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Post by rgs2001uk on Oct 20, 2020 20:52:47 GMT 7
I'm not sure that repeatability always needs to be the objective, isn't it all about spotting a rising star and buying in early, which is what BG seems to have done. Your argument that the Tesla product is shoddy and will be usurped by the Japanese sounds like wishful thinking or sour grapes! You have to admit that Musk is pushing the envelope when it comes to creativity and turning concept into production units. His work in developing batteries has resulted in entire towns being powered by Tesla batteries and that's pretty impressive. But of course, nobody stay king of the pile forever and one day he will be usurped, but it hasn't happened yet and there doesn't seem to be anyone on the horizon either. The bottom line from an investment point of view is that there's no reason in this world why the investment always needs to be sustainable and repeatable. We'd all take a Tesla equivalent as a one off for a year or two and then move on to something else, you yourself said you regretted not selling and taking the 100+% profit which is exactly what BG seems to be doing. CM, I believe it was you who asked the question about these articles, and if they were nothing more than advertorials or influencers. www.trustnet.com/news/5053146/four-funds-to-hold-if-you-already-own-scottish-mortgage?fbclid=IwAR2e1QTQceD9_qp-yKHDdTUB9OgvoolfC4Xd7XXQ5faYhikOwYELnuqEacUI find the comments section more enlightening than the article itself, and thanks to whoever pointed this out, I have never heard of it. www.hl.co.uk/shares/shares-search-results/h/herald-investment-trust-ordinary-25p
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Post by rgs2001uk on Oct 20, 2020 20:56:47 GMT 7
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chiangmai
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Post by chiangmai on Oct 21, 2020 6:02:07 GMT 7
I'm not sure that repeatability always needs to be the objective, isn't it all about spotting a rising star and buying in early, which is what BG seems to have done. Your argument that the Tesla product is shoddy and will be usurped by the Japanese sounds like wishful thinking or sour grapes! You have to admit that Musk is pushing the envelope when it comes to creativity and turning concept into production units. His work in developing batteries has resulted in entire towns being powered by Tesla batteries and that's pretty impressive. But of course, nobody stay king of the pile forever and one day he will be usurped, but it hasn't happened yet and there doesn't seem to be anyone on the horizon either. The bottom line from an investment point of view is that there's no reason in this world why the investment always needs to be sustainable and repeatable. We'd all take a Tesla equivalent as a one off for a year or two and then move on to something else, you yourself said you regretted not selling and taking the 100+% profit which is exactly what BG seems to be doing. CM, I believe it was you who asked the question about these articles, and if they were nothing more than advertorials or influencers. www.trustnet.com/news/5053146/four-funds-to-hold-if-you-already-own-scottish-mortgage?fbclid=IwAR2e1QTQceD9_qp-yKHDdTUB9OgvoolfC4Xd7XXQ5faYhikOwYELnuqEacUI find the comments section more enlightening than the article itself, and thanks to whoever pointed this out, I have never heard of it. www.hl.co.uk/shares/shares-search-results/h/herald-investment-trust-ordinary-25pNo, it was AyG who suggested that many funds were over promoted by such articles. TBH I receive "Fund Research Updates" from HL about once a month and mostly I just glance at them and throw them in the bin. Sometimes they give me food for thought and help me to consider different ways of looking at funds but I've never read one and gone wow, this is a must buy or even said this is something I must follow up on. I've always thought the purpose of those flyers were to give people ideas and to provide options rather than promote, but that's just me.
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chiangmai
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Post by chiangmai on Oct 22, 2020 6:09:49 GMT 7
Talking of Tesla: one wonders in what rational world Tesla is a good investment? "Tesla Inc. reported a fifth consecutive quarter of profits Wednesday, handily beating analysts’ estimates, and said it remains on track to deliver 500,000 cars in 2020 despite weaker sales in the rest of the global auto industry". "Tesla’s gross margins inched up more than 250 basis points in the quarter to 23.5%, while operating margins grew to 9.2% -- even after Chief Executive Officer Elon Musk received $290 million for hitting compensation targets". “What jumped out to me is gross margins,” said Gene Munster, managing partner at Loup Ventures. “That’s the machine that keeps the machine growing. They are making more money from each car.” www.bloomberg.com/news/articles/2020-10-21/tesla-posts-fifth-quarter-of-profit-reaffims-2020-delivery-goal?srnd=premium-asia
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AyG
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Post by AyG on Oct 22, 2020 6:57:06 GMT 7
^^^ Personally, I'm long past wondering whether Tesla is a good investment. It's not. Just compare it with the second largest car manufacturer by market cap.
Tesla has a market cap of $393.2 billion. Toyota's market cap is less than half that at $183.6 billion. Is Tesla as a company really worth twice as much as Toyota? Well, last year Tesla sold 367,500 vehicles; Toyota sells more than 10 million every year - 27 times as many. Toyota's profit in the year to March 2019 was $17 billion - a bad year for them. Tesla in that year lost $862 million, and its cumulative losses are $6 billion. Tesla's P/E Ratio is 904.70; Toyota's is 12.52. Everything suggests that Tesla's share price is ludicrously and unsustainably high.
It's not as if Tesla has a unique product. In the first half of 2020 it sold 179,050 vehicles globally. Volkswagen group sold 124,018 plugin vehicles (electric + hybrid), so not far behind. In fact Tesla only has 19% of the global plugin market.
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