Stocks and Shares ISA


No point, you are not listening.

(Matt) #82

Wrong way around - you’re not wanting to concede that a select few funds will outperform the market. Yes, finding them will take time, but saying all funds cannot outperform the market is demonstrably false.

(Christopher) #83

@Matt88 more leading on from what @katrina said you might find this article by Mr Soros writing in the FT very interesting, I certainly did. It’s a fairly long read, but well worth it…

Unfortunately I’m on mobile so it’s a bit of a pain to copy/paste/quote the juicy bits.

Soros: General Theory of Reflexivity

[If it’s stuck behind a paywall, you can google the title, in bold, and usually access the article FoC]

(MikeF) #84

Actually, you just disagree with each other. It happens. No one needs to concede anything.

(Vladislav Kozub) #85

Based on John Boggle’s (founder of Vanguard) “Little Book of Common Sense Investing”, there were 2% mutual funds (sample of 400) that could ever outperform the market on a 10-years’ timescale.

If you raise it to 20 years, if I remember correctly, it was ONLY Fidelity and nobody else, and it only happened once.

Of course, there could be plenty of individual investors outperforming the market, say, if you kept Amazon only since 2000. But when we look at diversified institutional investors (i.e. Mutual Funds), you will never ever stand a chance of guessing which one will be the next Fidelity. Hence you will always lose to the market on a long-term scale.


At no point have I said that no funds will outperform the market. And it is not a matter of agreement, you can’t disagree with facts.

Look up SPIVA - it is the comparison of funds against indexes. It shows that at 1 year, 30-50% of active funds outperform their benchmark. It shows that from one measurement period to the next the funds in the top spots are rarely the same ones. It also shows that at 15 years, only 8% of funds beat their benchmark. And that’s 8% of funds that survive to 15 years. Most poorly performing funds are closed long before.

Those are the facts.

My opinion, based on those facts, is that you don’t have a cat in hell’s chance of picking the 1 in 12 funds that will outperform over 15 years, and even less chance of picking one that will outperform over your investing lifetime. So you should just invest in the market as a whole.

(Paul) #87

I’m currently using Moneybox and Plum but both of these have management fees so I’m assuming I will need to invest enough each year to warrant the charge. I don’t really know what I’m doing so will begin to read up more, but my plan is to find the right investment option - maybe Freetrade - and add to this each month and lock my money away until retirement.

(Matt) #88

A question to you both - why do you think you shouldn’t move around funds every few years? For almost every year since its inception in 2011, it’s been clear that Lindsell Train Global Equity has outperformed the market by a generous amount…While that may not continue to happen, if you want to maximise return, surely you’ll want to be continuously researching and reinvesting in funds? Acting as if you have one shot and have to keep your money in the same place for a minimum of 15 years is categorically flawed.

(Vladislav Kozub) #89

You are implying that you can predict the potential of these funds’ growth. If you can do it consistently, you would have been at GS, JPM or BlackRock.

Also, you lose on transaction fees, management fees per se are at least double-digits basis points if not triple. If you start investing into the global market from the age of 20 to 60 and compare such behaviour to constant switching, taking into account all the fees and time spent on research, you may realise that it just would not be worth it.

That said, I will always advocate for Index Trackers but do personally stock pick 100% in stocks and 0% in ETF’s / Index Funds, simply for fun. But when you are saying that one should be predicting which funds will outperform the market and when, that would not apply to 99.999% of the worlds’ population.


What Vlad said.

Plus, I gave you the challenge - tell me which fund will outperform, you can switch as often as you like but you have to pay the charges. We’ll compare your performance against VWRL.

I’m willing to put up real money, I have absolute confidence in the win.

( related to Monzo CEO, Investor in Monzo ) #91

here are my funds along with the Vanguard Life 100% Equity (F in the table and chart ) over 5 years its near the bottom of my picks , 10 years maybe mid table at best :slight_smile: - I don’t hold the Vanguard life :slight_smile:

Vanguard showing 62% gain over 5 years against my top performer of 163% :slight_smile: my portfolio average over 5 years is 121%

having said all that these are statistics - all depends on when you buy , when you sell , or when you need to sell :slight_smile:

IMG_3295 IMG_3294

(Vladislav Kozub) #92

Probably would not be best to compare LS100 (mostly a UK-biased tracker, which has been quite weak) to trusts that probably are significantly in the US stocks - they have absolutely different benchmarks.

I can see you have things like Biotech and Small Cap - they probably do not pay (or pay little) dividends. If you consider compounding DRIP back into LS100, a 5-years’ 62% could easily rise to something like 80% to 100% (S&P500 has been about 100% even without DRIP adjustment).

Also, neither 5 nor 10 years are objective for evaluation nowadays, simply because the bull market has taken place for the past 10 years. The idea of Index Funds is to minimise the losses which are inevitable during bear market and recessions - may small caps will simply go bust so you could not expect “C”, for example, to continue with 30% average growth YoY

( related to Monzo CEO, Investor in Monzo ) #93

I think IBT pays around 4% divi :slight_smile:

lol - bull markets - all a generalisation if I had bought 10 years ago with £10000 in Vanguard and £10000 in any of my US specific funds I would have been happy (twice as happy ) :slight_smile: - the older you get the less objective timescale for investing is relevant :slight_smile:

( related to Monzo CEO, Investor in Monzo ) #94

Probably would not be best to compare LS100 (mostly a UK-biased tracker, which has been quite weak)

we must be looking at a different Vanguard LifeStrategy 100% Equity - mine says it “only” has 24% in UK equities :slight_smile:


(Brian Hunter) #95

So what would be recommended for an idiot? Vanguard or Freetrade?

For clarity, I’m the idiot.

(Hugo) #96

I am also an idiot and I use

I think it strikes the perfect balance of low cost and simplicity - although not for eveyone

(Brian Hunter) #97

There are so many choices out there, I have indecision paralysis.

Choice is great if you know what you’re after!

(Nick) #98

I think something like Nutmeg that just lets you pick a purpose and a level or risk and does everything for you is a great choice for a beginner. You might not get the best return possible, but hey that’s investing for you. You can always move around as you gain more confidence.

(Christopher) #99

@iptoriga @hugomanners you’re certainly not idiots.

Freetrade is an execution only broker, so they provide a platform for you to buy, sell, hold and manage your shares, ETFs and other securities, but do not market or manage the actual funds or securities themselves. Think of them as a conduit to purchasing shares and funds from financial markets. Their primary USP once they launch will be their low to zero costs to buy and sell these assets - traditional brokers charge up to £20 to place a single trade, which is frankly bonkers.

Vanguard on the other hand is an investment advisor cum asset manager so they build, manage and market mutual funds and ETFs to retail clients and institutions. They are an enormous business with an extensive (second to BlackRock in the ETF game) portfolio of funds. Their USP is also low costs of management and administration, but you can only buy their funds from them. If you wanted to buy Apple stock, you’d need a broker, like Freetrade, where you can also buy Vanguard EFTs. (Other providers do exist, iShares being another dominant player)

@hugomanners Nutmeg are very expensive if you consider the fee costs over any length of time, which ultimately eats in to what you could be investing in real assets rather than fund manager’s lunches. The good news is, change is a comin’, and the likes of Freetrade arriving on the scene should start to shake up what has been quite a staid business.

(Alex Sherwood) #100

And if anyone’s wondering why fees make such a big difference when you invest, this blog post explains really well (if you can ignore the mentions of millennials :see_no_evil:) -