BTL vs Shares (Funds) vs Alternatives

[sidicks]

5pen said:

FTSE All-Share passive fund performance for the last 5 years;
HSBC FTSE All Share Index A Acc
30/11/11 - 30/11/2012 14.55%
30/11/12 - 30/11/2013 19.37%
30/11/13 - 30/11/2014 3.54%
30/11/14 - 30/11/2015 1.12%
30/11/15 - 30/11/2016 10.16%

Active 'Global' Equity fund performance for the last 5 years;
Fundsmith Equity I Acc
30/11/11 - 30/11/2012 19.93%
30/11/12 - 30/11/2013 23.43%
30/11/13 - 30/11/2014 22.87%
30/11/14 - 30/11/2015 13.88%
30/11/15 - 30/11/2016 27.84%

I think these figure are calculated with dividends re-invested and after management fees but not any platform fees, so there would probably be a charge to hold them, say 0.5% max.

Past performance is no guarantee yadda, yadda, but as long as the good years make up for the bad ones and you pick your fund to suit your appetite for risk, I don't think they are particularly hard for the average Joe to invest in and see a reasonable return.

[rufusgti]

sidicks said:

5pen said:

FTSE All-Share passive fund performance for the last 5 years;
HSBC FTSE All Share Index A Acc
30/11/11 - 30/11/2012 14.55%
30/11/12 - 30/11/2013 19.37%
30/11/13 - 30/11/2014 3.54%
30/11/14 - 30/11/2015 1.12%
30/11/15 - 30/11/2016 10.16%

Active 'Global' Equity fund performance for the last 5 years;
Fundsmith Equity I Acc
30/11/11 - 30/11/2012 19.93%
30/11/12 - 30/11/2013 23.43%
30/11/13 - 30/11/2014 22.87%
30/11/14 - 30/11/2015 13.88%
30/11/15 - 30/11/2016 27.84%

I think these figure are calculated with dividends re-invested and after management fees but not any platform fees, so there would probably be a charge to hold them, say 0.5% max.

Past performance is no guarantee yadda, yadda, but as long as the good years make up for the bad ones and you pick your fund to suit your appetite for risk, I don't think they are particularly hard for the average Joe to invest in and see a reasonable return.

See that seems like incredible returns to me. Have you just picked out the two best from a list or are these funds your invested in.
Can we talk a little more about risk then, as I'm discovering this is the bit where knowledge is key and perhaps the bit worth gathering advice from more than just your financial advisor.
What % of ones savings is considered low/medium risk. Let's say, that I had a company pension, considered to be very good, I'm in my mid 30's, I have invested in property through BTL but want to spread my bets a little wider. If I had a pot of 30k for instance, what percentage would be wise to consider investing in S&S. Looking at the above investments, the boy in me says plough in. But what do investors see as a healthy percentage of total pot to invest in these things.

[Ginge R]

drainbrain said:

See this is where it starts going wrong. This is investment for the completely ignorant/uninitiated. The Ordinary Joe who wants to put £50 a month into a something that he knows is going to grow at 5%pa. and all he needs to do is keep putting the £50 a month in knowing it'll keep doing that 5%. Google is telling me that's difficult without 'risk'. And it's also telling me that taking risk often isn't acceptable/sensible depending on the purpose of the investment.
There certainly isn't a bank account that returns 5%. Or a joint life annuity. Or a guaranteed bond. Is there?

Interesting, and a fundamental quandary. The problem is, if you can receive 5% without engaging in any risk, what incentive would there be for anyone to invest in assets which have to carry risk? If you then say, what used to make you 5% with risk can now be achieved without risk (or 10% with risk), how does that sit with money supply/monetary policy etc? Why would anyone invest in SME/ all companies, something which is needed to stimulate the economy or grow employment?

[Ginge R]

sidicks said:

It certainly does exist.

And I believed a decent example is the platform you've recently invested in with GingeR (although similar products are available elsewhere).

Thank you. And MIFIDII is going to bring about some interesting changes to it. I almost sold it a few months back and only changed my mind at the last moment. Glad I did.

[basherX]

sidicks said:

5pen said:

FTSE All-Share passive fund performance for the last 5 years;
HSBC FTSE All Share Index A Acc
30/11/11 - 30/11/2012 14.55%
30/11/12 - 30/11/2013 19.37%
30/11/13 - 30/11/2014 3.54%
30/11/14 - 30/11/2015 1.12%
30/11/15 - 30/11/2016 10.16%

Active 'Global' Equity fund performance for the last 5 years;
Fundsmith Equity I Acc
30/11/11 - 30/11/2012 19.93%
30/11/12 - 30/11/2013 23.43%
30/11/13 - 30/11/2014 22.87%
30/11/14 - 30/11/2015 13.88%
30/11/15 - 30/11/2016 27.84%

I think these figure are calculated with dividends re-invested and after management fees but not any platform fees, so there would probably be a charge to hold them, say 0.5% max.

Past performance is no guarantee yadda, yadda, but as long as the good years make up for the bad ones and you pick your fund to suit your appetite for risk, I don't think they are particularly hard for the average Joe to invest in and see a reasonable return.

I make monthly and fairly solid savings into a global equity tracker so I very much agree with and follow the above but it is, perhaps, worth reiterating that the period since the financial crisis has provided some very good returns that are above long term averages and it's not reasonable to expect these to continue indefinitely. The MSCI World was showing a loss for 2011 as a whole (immediately before your data above), in 2008 (admittedly a very unusual year) fell by just over 40% and in 2000-2002 showed three years of double digit negative returns so people, particularly shorter term or risk averse investors really do need to go into this with their eyes wide open.

[5pen]

rufusgti said:

sidicks said:

5pen said:

FTSE All-Share passive fund performance for the last 5 years;
HSBC FTSE All Share Index A Acc
30/11/11 - 30/11/2012 14.55%
30/11/12 - 30/11/2013 19.37%
30/11/13 - 30/11/2014 3.54%
30/11/14 - 30/11/2015 1.12%
30/11/15 - 30/11/2016 10.16%

Active 'Global' Equity fund performance for the last 5 years;
Fundsmith Equity I Acc
30/11/11 - 30/11/2012 19.93%
30/11/12 - 30/11/2013 23.43%
30/11/13 - 30/11/2014 22.87%
30/11/14 - 30/11/2015 13.88%
30/11/15 - 30/11/2016 27.84%

I think these figure are calculated with dividends re-invested and after management fees but not any platform fees, so there would probably be a charge to hold them, say 0.5% max.

Past performance is no guarantee yadda, yadda, but as long as the good years make up for the bad ones and you pick your fund to suit your appetite for risk, I don't think they are particularly hard for the average Joe to invest in and see a reasonable return.

See that seems like incredible returns to me. Have you just picked out the two best from a list or are these funds your invested in.
Can we talk a little more about risk then, as I'm discovering this is the bit where knowledge is key and perhaps the bit worth gathering advice from more than just your financial advisor.
What % of ones savings is considered low/medium risk. Let's say, that I had a company pension, considered to be very good, I'm in my mid 30's, I have invested in property through BTL but want to spread my bets a little wider. If I had a pot of 30k for instance, what percentage would be wise to consider investing in S&S. Looking at the above investments, the boy in me says plough in. But what do investors see as a healthy percentage of total pot to invest in these things.

I do hold the FTSE All Share fund (as 1 of a dozen or so), but not the Fundsmith one. I actually picked Fundsmith as an example because it is one I would consider quite low risk (in Fund terms that is - there's always the risk of your investment diminishing). It favours holding established companies for the long-term in industries where the barriers to entry are high (its largest holding is Microsoft). I do hold a Global Equity Fund from a different manager (Lindsell Train) which hasn't performed quite so well, but still at a level I'm happy with.

Lindsell Train Global Equity
01/12/11 to 01/12/12 12.63%
01/12/12 to 01/12/13 27.42%
01/12/13 to 01/12/14 13.71%
01/12/14 to 01/12/15 16.93%
01/12/15 to 01/12/16 17.64%

Personally (and I am very much an amateur), I manage risk to a level I am comfortable with by investing in a wide variety of funds in terms of geographic split, a mix of funds that invest in both smaller capitalised and larger capitalised companies and by holding some cash. I tend not to invest in funds which focus on particular sectors. I also hold a mix of actively managed and tracker funds.

As has been noted, the last 5 years have been good for equity markets in general, the 3 years prior to that would have seen a very different set of numbers.

Edited by 5pen on Saturday 3rd December 08:17

[sidicks]

5pen said:

I do hold the FTSE All Share fund (as 1 of a dozen or so), but not the Fundsmith one. I actually picked it because it is one I would consider quite low risk (in Fund terms that is - there's always the risk of your investment diminishing). It favours holding established companies for the long-term in industries where the barriers to entry are high (its largest holding is Microsoft). I do hold a Global Equity Fund from a different manager (Lindsell Train) which hasn't performed quite so well, but still at a level I'm happy with.

Eh? You described the fund as a passive fund, which would suggest it invests in line with the index benchmark.

[5pen]

sidicks said:

5pen said:

I do hold the FTSE All Share fund (as 1 of a dozen or so), but not the Fundsmith one. I actually picked it because it is one I would consider quite low risk (in Fund terms that is - there's always the risk of your investment diminishing). It favours holding established companies for the long-term in industries where the barriers to entry are high (its largest holding is Microsoft). I do hold a Global Equity Fund from a different manager (Lindsell Train) which hasn't performed quite so well, but still at a level I'm happy with.

Eh? You described the fund as a passive fund, which would suggest it invests in line with the index benchmark.

HSBC - Passive
Fundsmith - Active

I was referring to Fundsmith with the text in bold. My wording doesn't make it that clear on re-reading it.

[sidicks]

5pen said:

HSBC - Passive
Fundsmith - Active

I was referring to Fundsmith with the text in bold. My wording doesn't make it that clear on re-reading it.

Ok, makes sense now. Thanks for the clarification!

[BoRED S2upid]

rufusgti said:

See that seems like incredible returns to me. Have you just picked out the two best from a list or are these funds your invested in.
Can we talk a little more about risk then, as I'm discovering this is the bit where knowledge is key and perhaps the bit worth gathering advice from more than just your financial advisor.
What % of ones savings is considered low/medium risk. Let's say, that I had a company pension, considered to be very good, I'm in my mid 30's, I have invested in property through BTL but want to spread my bets a little wider. If I had a pot of 30k for instance, what percentage would be wise to consider investing in S&S. Looking at the above investments, the boy in me says plough in. But what do investors see as a healthy percentage of total pot to invest in these things.

As much as you can afford to loose if it all went wrong or lost 10%. I'm in a few of the funds mentioned in this thread but as the figures quoted by others show they have made double figure profits every year for the past 5 which I don't view as high risk. There are lots more funds out there that are a lot higher risk. HL is a good source of information to see how funds have performed, what and where they invest in and they will have info on the fund manager which I find interesting. What makes him (or her) qualified to manage my money? How long have they been doing it for etc...

[sidicks]

BoRED S2upid said:

As much as you can afford to loose if it all went wrong or lost 10%. I'm in a few of the funds mentioned in this thread but as the figures quoted by others show they have made double figure profits every year for the past 5 which I don't view as high risk. There are lots more funds out there that are a lot higher risk. HL is a good source of information to see how funds have performed, what and where they invest in and they will have info on the fund manager which I find interesting. What makes him (or her) qualified to manage my money? How long have they been doing it for etc...

You don't measure risk by looking at how well an asset has done over a favourable period!