Discretionary Fund Manager no trades since April

[jmn]

I have a fairly large sum of money in ISA and SIPP Portfolios which is managed on a discretionary basis by a large institution which has a large stripey animal as it's emblem.

I have a separate IFA. He has mentioned today that neither of these Portfolios show any trades since April.

My Investment Manager is still in post.

Is this unusual or are a lot of these companies now 'sitting on their hands' because of market uncertainty?

[NickCQ]

How do the returns over the period compare to benchmarks before and after fees? That's what you are paying them for, not a prescribed amount of activity.

[Derek Chevalier]

jmn said:

I have a fairly large sum of money in ISA and SIPP Portfolios which is managed on a discretionary basis by a large institution which has a large stripey animal as it's emblem.

I have a separate IFA. He has mentioned today that neither of these Portfolios show any trades since April.

My Investment Manager is still in post.

Is this unusual or are a lot of these companies now 'sitting on their hands' because of market uncertainty?

In the words of the late, great Jack Bogle, "Don't Do Something, Stand There!". It's very easy to give the perception of value by constantly tinkering with a portfolio but in reality, it's like an ice cube, every time you touch it, it starts to shrink!

There's always something to worry about in the market, but given that it's pretty much impossible to time it, very little you can do about it.

That said it's sometimes questionable what value a discretionary fund manager can add for the vast majority of clients.

[Derek Chevalier]

NickCQ said:

How do the returns over the period compare to benchmarks before and after fees? That's what you are paying them for, not a prescribed amount of activity.

I think you'd have to be careful to ensure that valid benchmarks were used and prepare to be disappointed.

Edited by Derek Chevalier on Wednesday 6th October 15:50

[Simpo Two]

NickCQ said:

How do the returns over the period compare to benchmarks before and after fees? That's what you are paying them for, not a prescribed amount of activity.

Agreed, but you can also see the 'I'm paying these guys x% to do nothing' angle. Or 'What am I paying them for?'

It might be worthwhile adding up how much the DFM and IFA are costing you, then you can judge if they're worth it.

[jmn]

Thanks for the replies. I have raised the matter with my investment manager and will update when I have a reply.

[xeny]

As Derek says, trading definitely costs money. If they've not got any genuinely better ideas about places to put money, is it worth applying any perceived pressure to encourage churn?

If as a result you're now wondering what you pay them for, I'm not sure that's necessarily a bad thing.

At one point I was reading reports from an investment manager, and felt his major effort was providing rationales for his trades that he could put in the report, rather than actually working out rational trades.

[Simpo Two]

When I ended up with a DFM it was curious how many trades were just under the cheaper break-point in charging tiers. I have a nasty feeling that in total I was losing 3-4% a year... it never was quantified.

[Gnevans]

Based on the South Coast by any chance?

[Simpo Two]

Gnevans said:

Based on the South Coast by any chance?

Nope, some two-bit outfit in Essex.

[HootersGsy]

I guess the question is why do you feel there should be activity?

My investment manager hasn't made any changes in a similar time frame as the investments in there are performing well and there's no substantive reason to tinker with it.

[BlackG7R]

Terry Smith states buy good companies, then do nothing. These are his two main aims.

Why would you want your manager to be trading on a regular basis, it will usually just cost you money ??

[gts.981]

Simpo Two said:

NickCQ said:

How do the returns over the period compare to benchmarks before and after fees? That's what you are paying them for, not a prescribed amount of activity.

Agreed, but you can also see the 'I'm paying these guys x% to do nothing' angle. Or 'What am I paying them for?'

It might be worthwhile adding up how much the DFM and IFA are costing you, then you can judge if they're worth it.

That’s exactly it. YOU ARE PAYING THEM TO DO NOTHING. Chill out. Or move your money.

[Simpo Two]

gts.981 said:

That’s exactly it. YOU ARE PAYING THEM TO DO NOTHING. Chill out. Or move your money.

Special offer - I'll do nothing for half the price. You'll be loads better off

[dmahon]

If you are paying for and they are offering discretionary trading, you must be bought into the idea that people can time the market.

With that in mind, I might expect to see more activity over the last few months. We’re finally moving past Covid, China st show, inflation taking off, US tech hitting peaks etc. If you don’t discretionary trade in this environment then when do you?

This said, I’m all in on Vanguard passive funds with set and forget for 0.X fees. 20 years of trying have showed that the more I touch, the less money I make!

[jeff m]

I'll churn it for you
Ask your IFA what their reporting rules are

Some fund managers prefer certain vehicles with 3 Month or longer periods of "non reporting" whereas Hedge funds e.g.,. everyone can see their trades.

April does seem rather long for a fund manager to not even lend something even if he is sitting pretty.

I would certainly make an inquiry just to make sure the bu66er hasn't died. (.It lets him know you are watching.)

Annual/ semi annual report?

Edit to add
Just realised I've done nothing since April

Edited by jeff m on Friday 8th October 16:15

[Northernboy]

Why are you paying someone for this?

[GT03ROB]

NickCQ said:

How do the returns over the period compare to benchmarks before and after fees? That's what you are paying them for, not a prescribed amount of activity.

So what was the answer to Nicks question?

Doing nothing may have been the right answer. You are paying the DFM to make the right decisions about your portfolio, not just trade.

[Benbay001]

Northernboy said:

Why are you paying someone for this?

Because if they did it their self they would evidently overtrade.