macq
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Post by macq on Jun 15, 2018 15:54:39 GMT
One approach to take is to not buy in one go. Emotionally it’s sometimes best to buy a quarter, wait a month, buy another quarter, etc. That means that you never buy at the absolute peak. Or you can just buy a regular amount each month. As long as the (fixed) costs aren’t increased, this can work well. For some reason, it’s sometimes called “pound cost averaging”. it is a good way of ignoring all the noise from the likes of Trump,Europe,elections,trade wars etc
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angrysaveruk
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Post by angrysaveruk on Jun 15, 2018 17:42:50 GMT
They tend to sell their services based on past performance - which is probably more to do with luck and not skill. Just like someone claiming to be the world champion coin flipper would just have been lucky and not had a skill at flipping coins  ok, so niaive question, sorry if annoying to some, but all funds appear 'managed to me', in that they have a name, eg s&p global is mentioned a fair bit rather than trying to gamble on the market oneself. Is that global fund not managed a bit? Or just cheaper for more hands off by s&p? As Paul123 stated managed in the context I am talking about is picking assets or algorithmic trading platforms, and there is very little evidence to suggest it is worth paying the over the top management fees they charge. The alternative to Managed Funds are Tracker Funds which simply track some index or buy a segment of the market, these dont charge high fees and you get cheap diversification (ie save on transaction costs). Unless you have some inside information and dont mind risking going to prison, exchange traded tracker funds is the way to invest in the stock market imo.
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ashtondav
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Post by ashtondav on Jun 16, 2018 9:40:40 GMT
Market etfs are not diversified. You are very exposed to the highest weighted shares, as they go up in price the etf buys more.
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Post by dan1 on Jun 16, 2018 9:47:11 GMT
Market etfs are not diversified. You are very exposed to the highest weighted shares, as they go up in price the etf buys more. Think you're appealing to a very narrow audience given there is more than $4.5 trillion in ETFs at present.
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Post by samford71 on Jun 16, 2018 10:36:39 GMT
At the risk of teaching my grandmother to suck eggs, it's necessary to distinguish between the investment vehicle and the investment style. Managed funds (OEICS, Unit Trusts etc) and ETFs are two (of many) types of investment vehicle. Passive and active are two (of many) types of investment style.
While ETFs first started in the early 1990s, they have never been prevalent during a sustained bear market. The size of the ETF market has grown 5x since 2008 and this could create major liquidity risks. The ETF market relies on the ability of the market markers to create/redeem ETF shares quickly, which in turn relies on the arbitrage between the price of the ETF with the fair value of the products (say single stock equities) in the basket. The problem is that regulation has resulted in the market makers having little ability to take risk and an unwillingness to use balance sheet. So on one side in a downturn you would have huge institutional and retail selling flows in ETFs and on the other side a small market making community. Given the underlying shares are far less liquid than the ETFs, the risk is that they simply will not be able to clear the flows.
Passive investing is creating similar liquidity issues. First, it favours large caps. In theory this means that the biggest companies are getting bigger, regardless of fundamentals. It's essentially exacerbating momentum and that can work both ways. Second, passive relies on active investors to allow it to function. Take passive to it's asymptotic limit: imagine there were only passive funds, a 100% passive market. Who exactly do they sell to in a downturn? The market needs a balance between passive investors and active investors/specualtors who can take the other side. As passive gets bigger and active gets smaller, that imbalance can become a problem.
Basically, while the proliferation of passive investing and ETFs are good for many investors (essentially becaue they are cheaper), I don't think most realize that these products and styles are embedding much higher risk into the system as they are simply overpromising liquidity in many asset classes.
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bigfoot12
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Post by bigfoot12 on Jun 16, 2018 23:22:38 GMT
Market etfs are not diversified. You are very exposed to the highest weighted shares, as they go up in price the etf buys more. Not sure that is strictly true. As they go up they naturally become more valuable and indeed the proportion of the fund held in them increases, but in general they don't buy more. (They might have to buy more if the market cap increases for some other reason such as a takeover, but this can happen if the price falls or rises.)
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ashtondav
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Post by ashtondav on Jun 17, 2018 7:00:52 GMT
A FTSE100 tracker has over 40% of your money in just 10 shares, over 7% in one share (HSBC), and over 20% in Financial shares.
diversified? My a*se!
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macq
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Post by macq on Jun 17, 2018 7:28:24 GMT
Most experts seem to agree One of the worst markets to track is the FTSE100 but due to it being the market most mentioned on the news and the brand names of the companies within,it seems to be heavily pushed as a first fund by many institutions especially to people who don't want a lot of fuss picking their own funds
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stevio
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Post by stevio on Jun 17, 2018 19:27:59 GMT
A FTSE100 tracker has over 40% of your money in just 10 shares, over 7% in one share (HSBC), and over 20% in Financial shares. diversified? My a*se! Your statement was ETFs originally, there was no distinction between different ETFs You then, maybe as a result of being challenged, pick one of the least diversified ETFs as justification for your sweeping statement Most World ETFs will have anywhere between 2000-4000 different companies shares. Even an S&P 500 ETF will have 500. The highest % is often Apple, but not more than 3% That is many times more diversity than managed funds as trackers attempt to buy the whole market, rather than cherry pick a much smaller selection
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angrysaveruk
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Post by angrysaveruk on Jun 17, 2018 19:46:00 GMT
Tracker style ETF are a great way to get a diversified portfolio cheaply and quickly imo. Even the FTSE 100 is a pretty diversified portfolio giving exposure to the UK economy.
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zlb
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Post by zlb on Jun 18, 2018 20:19:57 GMT
Well, I like the lemon fool page link from paul123 - I've previously tried that website and got lost in definitions, and complexities that I don't understand. E.g, I don't understand why "ETFs typically have higher daily liquidity and lower fees than mutual fund shares, making them an attractive alternative for individual investors." www.investopedia.com/terms/e/etf.aspIf anyone is willing to help, is there an analogy perhaps using a concrete example? Eg if fund were a combined investment in all real shops on a high street in xxx city, then an etf is that fund packaged as bags of sweets, called 'A Block of xxx High Street', that you can buy instead (but not eat)? It's much easier to trade those bags of sweets than it is a bit of fund because? Am I anywhere close? Hot or cold? I'll bumble along ok if I continue to misunderstand. |
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zlb
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Post by zlb on Jun 18, 2018 22:05:04 GMT
Tricky. Well “liquidity” is a gorgeous word to say and it’s really just a measure of how easy something is to buy and sell. For example, defaulted loans on most p2p platforms would have dreadful liquidity since it may be years before you can sell them! “Mutual” Funds often have really weird buying and selling rules and they are only “priced” daily. Typically, if you want to buy some units in fund you say “buy me £500 worth of that fund” on Monday and you’ll end up paying the Tuesday price. This is frankly bizarre. ETF’s by contrast are priced as frequently as the individual shares they represent and as such the price moves second by second. This means that people know they price they are paying when they buy it and can choose to buy or not to buy. ”Mutual fund” is what Americans call “funds”. In UK, we’re more likely to call them “Unit Trusts” or “OEICs” or just “Funds”. I’m firmly of the opinion that fees should be squeezed as much as possible. Not only do ETFs have low charges themselves but they are usually cheaper to “hold” in a broker account since most brokers seem to charge extra if you hold funds rather than ETFs or individual shares. Note: I’m aware that I am glossing over some subtle issues here but I’m hoping my main thrust can be accepted as help to those seeking an initial understanding. The ETF bag of sweets is more liquid because at all times it is priced according to what’s in the bag so if the sherbet lemons increase in price for three minutes and then go down again then the price of the bag of sweets changes accordingly and at the same instant. The Mutual fund bag of sweets has a price but the price lasts all day and is the same all day regardless of the price of the individual sweets but if you want to buy a bag you have to promise to pay the next day price and wait till tomorrow at mid-day to find out what you got. oh. Thanks. Reasonably on target in my bag of sweets analogy then. So if I buy in an investment trust, with a day order or gtc, it's just waiting for a change in price day by day rather than minute by minute, or perhaps I am buying etf without realising? I'm only just tinkering at the moment.
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macq
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Post by macq on Jun 19, 2018 7:00:44 GMT
Tricky. Well “liquidity” is a gorgeous word to say and it’s really just a measure of how easy something is to buy and sell. For example, defaulted loans on most p2p platforms would have dreadful liquidity since it may be years before you can sell them! “Mutual” Funds often have really weird buying and selling rules and they are only “priced” daily. Typically, if you want to buy some units in fund you say “buy me £500 worth of that fund” on Monday and you’ll end up paying the Tuesday price. This is frankly bizarre. ETF’s by contrast are priced as frequently as the individual shares they represent and as such the price moves second by second. This means that people know they price they are paying when they buy it and can choose to buy or not to buy. ”Mutual fund” is what Americans call “funds”. In UK, we’re more likely to call them “Unit Trusts” or “OEICs” or just “Funds”. I’m firmly of the opinion that fees should be squeezed as much as possible. Not only do ETFs have low charges themselves but they are usually cheaper to “hold” in a broker account since most brokers seem to charge extra if you hold funds rather than ETFs or individual shares. Note: I’m aware that I am glossing over some subtle issues here but I’m hoping my main thrust can be accepted as help to those seeking an initial understanding. The ETF bag of sweets is more liquid because at all times it is priced according to what’s in the bag so if the sherbet lemons increase in price for three minutes and then go down again then the price of the bag of sweets changes accordingly and at the same instant. The Mutual fund bag of sweets has a price but the price lasts all day and is the same all day regardless of the price of the individual sweets but if you want to buy a bag you have to promise to pay the next day price and wait till tomorrow at mid-day to find out what you got. oh. Thanks. Reasonably on target in my bag of sweets analogy then. So if I buy in an investment trust, with a day order or gtc, it's just waiting for a change in price day by day rather than minute by minute, or perhaps I am buying etf without realising? I'm only just tinkering at the moment. if buying an investment trust you are nearly always buying at a minute by minute price as they are a exchange traded product i.e Scottish Mortgage can be found in the Footsie 100.You should not be buying an ETF without realising as it should say in its title (would assume all IT's will have PLC in theirs) The words tinkering in relation to money should never be heard so maybe have a look at the savings & investment forum on MSE as it tends to have threads on starting,ideas etc
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ozboy
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Post by ozboy on Jun 21, 2018 11:27:17 GMT
Maybe bunging some of yer sesterces and ducats into Oz dollars via Oz Ratesetter is worthy of consideration? They appear in rude health Downunder:- ratesetter-marketing-prod.s3.amazonaws.com/docs/default-source/financial-information/ratesetter-lending-platfom-financial-report-2018.pdf
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stevio
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Post by stevio on Jun 21, 2018 16:27:15 GMT
Maybe bunging some of yer sesterces and ducats into Oz dollars via Oz Ratesetter is worthy of consideration? They appear in rude health Downunder:- ratesetter-marketing-prod.s3.amazonaws.com/docs/default-source/financial-information/ratesetter-lending-platfom-financial-report-2018.pdf
But if you want to bring it back to the UK at some point, is there not the Brexit risk of the £ devaluing - ok if your off too oz though!
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