Shares are risky how about Unit Trusts, investment trusts

[ellroy]

If you've got the time, and inclination, the FCA report on asset management is out.

I think GingeR posted a link to it somewhere, that covers a lot of interesting things regarding cost, passive v active etc.

[jeff m2]

If you need to ask, then the answer is Funds (not individual stocks)

There is a lot of Vanguard advertising at present extolling the virtue of index funds. Most of it disguised as editorial
I still have a slight problem with the image of the the market dropping 8% and the fund manager asking his number two how they are doing.
His answer is "we are spot on, we are down 7.999%"

I have a problem with that.

However, picking the funds that beat the index after expenses can be difficult but not impossible.
Market awareness and a little work.

But picking another index fund that has an excellent chance of beating a FTSE 100 index fund isn't that difficult.

Choose a FTSE 250 index fund, more opportunity for growth, less dependent on oil and commodities.

Here is one just pulled out of the hat HSBC FTSE 250 Index C Acc there are others.

Put this on a graph with the Ftse 100 over 5 years.

[honest_delboy]

I was having a discussion with a colleague today, he said the trend is for people investing into passive funds rather than active funds. If this is true then why ? Surely the returns outweight the higher fees ? (just my simplistic view not an expert BTW)

[CrouchingWayne]

I'm currently in Vanguard 80% Lifestrategy, been accumulating it for a few years now so it is now (for me) quite sizeable. Does anyone have a similar position and have/did you add others funds to diversify further?

I don't want to over complicate it when it's already diversified, but can't help but wonder if there is some concentration risk creeping in.

[sidicks]

honest_delboy said:

I was having a discussion with a colleague today, he said the trend is for people investing into passive funds rather than active funds. If this is true then why ? Surely the returns outweight the higher fees ? (just my simplistic view not an expert BTW)

No guarantee that active funds will outperform passive funds, particularly when there are higher management fees and increased trading costs to take into account.

For equities, the bulk of the return comes from 'beta' i.e. market risk, therefore my view is that you should access that beta in the cheapest way i.e. through passive funds.