Stocks and Shares ISA

(Danny) #61

Here’s how it goes.

Step 1 - Start 10 funds, invest in any random assortment of anything but make sure each is different
Step 2- Give each a fancy sounding name ‘Positive Beta Global Wealth’ or ‘Emerging Small-Cap Sovereign Returns’
Step 3- Wait 3 years
Step 4- Hey presto, at least one of these will have outperformed the market. Keep it, close the rest.
Step 5- Promote the hell out of ‘Positive Small-Cap Emerging Beta’, full-page spreads in the Sunday Times, maybe a billboard outside London Bridge station
Step 6- Wait 3 years, oops ‘Positive Small-Cap Emerging Beta’ underperformed the market, never mind, if you had any sense you repeated Step 1 a few years ago.


This, a million times this.

(Andy) #63

I haven a couple of S&S ISAs but I’d like to invest in dividend paying shares, will Freetrade be a way of managing this or is the best way to buy into a dividend maximising fund?


Freetrade can certainly be the wrapper for it, you could go for a HYP or a dividend paying ETF.

As far as I’m aware they won’t be supporting funds, at least initially.

Maybe try on their forum?

(Alex Sherwood) #65

Here’s that link again :slight_smile:

(Danny) #66

They will! Here’s the list of what will be available at launch (next month)

Freetrade Securities Universe

Only the first tab will be available, but take VUKE or VUSA for example ‘Income will be distributed as cash’


I use ‘funds’ to mean unit trusts, oeics etc rather than ETFs.

I don’t think freetrade are supporting them?

(Danny) #68

Ah no, that is correct.

(Christopher) #69

@Anzo there’s some good dividend focussed ETFs out there, as well as some interesting corporate bond focused ETFs that have some good coupons (% interest payments) if income is your bag. If you want to be relatively hands off, ETFs are very useful. There are plenty of lists floating around on reputable sites with income focused ETFs. If you’re new to the ETF game, the KIID (Key Investor Information Document) is a most useful tool in helping you evaluate each fund; it’ll provide detail on the fund’s objectives, provide a risk score, outline charges and give a past performance snapshot, as well as providing any other relevant information.

Freetrade’s initial universe of stocks is fairly limited but the aim is to build it out over time to cover lots of markets and equities. They’ll release a roadmap in just over a month, which will hopefully have some meat on the bone in terms of what markets/securities they’ll add next.
ISAs are on the roadmap, but as it last stood, they won’t be ready for launch.

(Vladislav Kozub) #70

Japanese bubble has never recovered since 1989. If you invested $1,000 back then into Nikkei, you would have been on about $300 today (inflation adjusted).

But you are right if you take the global market diversification rather than regional (i.e. not 95% US stocks today)

(Matt) #71

Don’t you think that’s…well bordering a conspiracy theory? Apparently, there’s a global scam of hundreds of billions of dollars with no reasoning behind any of them

(Matt) #72

My argument has never been that ALL funds are better than trackers, but some funds definitely are better than trackers. If you’re willing to move around funds every few years, you can make more than a tracker.


The point is that you don’t know ahead of time which funds are going to outperform. Over 10 years you have approximately 5 in 100 chance of picking them.

Let’s modify the challenge then - we both start with a notional 10k, I’ll ‘invest’ mine in a global tracker, you ‘invest’ yours in a fund and ‘move’ it when you feel like it.

You document what you are going to ‘invest’ in ahead of each move.

If you beat my tracker over 10 years, I’ll give you the 500 quid. If not, you give me the 500.

(Danny) #74

Nothing about this is illegal, you wouldn’t be telling any lies. Some people would win, but most will lose out (kinda like a casino!)

(Matt) #75

Isn’t that what fund research is for though? Your stance is that it’s a roll of the dice, one devoid of any sensible, financial reasoning behind it.

But surely if you did a terrible job in managing a fund, no one would give you any further money, you’re career as a fund manager is over and you’re sent off to the Job Centre?


You can research all you like, they are not joking when they say ‘past performance is no guide to future performance’. Seriously rather than argue here, search for the research on this, it is compelling.

Investing is one of the few endeavours where additional expertise is NOT correlated with better performance. That means that it doesn’t matter how much you know, over the long term you are no better than a monkey with a dart.

People outperform for short periods of time and think they’re the mutts nuts. They mostly come down to earth with a bang.

It has been argued that even Buffett could be lucky chance - if you start with an investing population of tens of millions at the time he started, at least one of them is likely to be lucky enough with their stock picks to come out well ahead - i.e. 10 million monkeys randomly throwing darts at a stock list would find some of them performing amazingly. This is the problem with posteriori analysis of performance - we feel that it is due to superior performance whilst we would never have been able to predict it a priori.

Read ‘A random walk down wall street’ and ‘common sense on mutual funds’ to start off with.

(Katrina) #77

Active funds can’t outperform the market, because active funds are the market.

(Matt) #78

…Thats just not how funds work as they ideally should be a collection of the best performing shares and therefore on average will do better than the market which has to include the poor performers.


You simply do not understand what the market is.

(Matt) #80

Explain. Because if what was said is true, then clearly there’s a conspiracy going on and funds are lying about their performance. Remember, my point is the RIGHT funds will outperform the market, not that ALL funds will.