Active VS Passive

Discussion in 'Share Investing Strategies, Theories & Education' started by Big A, 13th Feb, 2019.

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  1. Big A

    Big A Well-Known Member

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    Thread Revive.

    I sort of gave up on this thread as I was getting overly obsessed with analysing everything and have moved more towards following a set action plan.

    But its been a few months and I thought I would check on some of the different funds to see if maybe things have changed and the active are gaining the upper hand over the index.

    And after a quick look it looks like Index is still outperforming most of the active funds. Luckily I took action a few months back and dumped half of all the active funds. Pengana , perpetual and the dreaded Bennelong Kardinia Absolute return fund are all gone and thank goodness for that after looking at there performance.

    On the Aus side I stuck with Hyperion Aus growth Companies fund as 1 of the 2 active plays. And looking over it that looks to have been a good active player to stick with. 3 months performance is 6.63% VS .68% in the index. Finished 2019 at 30.61% and has outperformed the index at all intervals. 1y , 2y , 5y and 10y.
    The other Aus fund I hold is Bennelong ex 20. Last 3 month result was 3.24% VS index 1.85%. But over the year it finished 25.05% VS index of 27.50%. over the 3 and 5y measures it has pretty much matched its index but over 10y its outperformed by 3.73%.

    Happy with the results there for the 2 active players I have decided to stick with.

    On the International side I only dumped the Grant Samuel Epoch fund. And again that looks to have been a good move.
    The others such as IFP, Walter Scott and Magellan Global have slightly outperformed the equivalent index over 2019. With the 2 infrastructure funds Lazard and Magellan. Lazard just underperformed and Magellan slightly overperformed the relevant index.

    Happy with the overall changes I made and the active managers I have stuck with for now. This gives me confidence to continue splitting capital between passive and active with the right managers.
     
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  2. Omnidragon

    Omnidragon Well-Known Member

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    Active is great, but you need to be actively researching, daily. Can easily double your money every 3 years, which is not bad considering it’s not levered. Probably need to do so without a day job.
     
  3. Froxy

    Froxy Well-Known Member

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    Isnt he outsourcing the active component so he doesnt have to do that?
     
  4. PandS

    PandS Well-Known Member

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    I am very active and doing really well since I took control of my SMSF in 2013 since then I quadruple my balance but that including contribution of around 20-25K a year

    The dividend I get each year now is so good that I either get franking credit refund or don't pay tax on my contribution and I keep putting the compounding machine to work at a high rate.

    I also have a trust account that do equally well, triple the money in the same time with no extra contribution.

    but I passive invest for my kids via A200 ETF with their saving since they reach legal age under their name to get them started and interested in stock market before I show them how to pick stock. I get them save up and at the time of my choosing I deploy the cash for them.
     
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  5. Big A

    Big A Well-Known Member

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    Yes I am. So for me active is via a active fund manager compared to passive index funds.
     
  6. Big A

    Big A Well-Known Member

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    Not having a dig but is it really that easy to double your money?

    So I chose some large reputable fund managers who have teams of highly educated people in the field of investing working with them and access to probably more information than the average single investor. Yet they aren't able to easily double your money every 3 years. So how easy is it really for the average person to do it?

    I am asking this in all seriousness because I keep reading stories of ordinary people who double and triple there portfolio in a short period of time through individual stock picking. Are there all these great individual investors out there doing what the big fund managers cant?
     
  7. Tofubiscuit

    Tofubiscuit Well-Known Member

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    Took a punt with 10% allocation in Bitcoin and 90% in Afterpay :p:p

    Saw the opportunity and market spirits before any of the funds!

    Not for me but hey, fortune favours the brave and I'm a scaredy cat (blue chip with high dividend and index ETF for me)
     
  8. Big A

    Big A Well-Known Member

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    Fair enough. Good on you. So I would take a punt on a single stock with say $10k or $20k. But thing is even if it doubles in a matter of weeks it really wont make a difference to my overall wealth. Would I take a punt with $100k or $200k in an attempt at doubling my investment. Probably not. But for me making a $10k or $20K profit on a short term punt is not going to get me excited. A $200k profit on a punt and I would be a little more enthusiastic.

    But being that I am not much of a gambler its not likely I would put up hundreds of thousands on a speculative bet that its going to double.
     
  9. Tofubiscuit

    Tofubiscuit Well-Known Member

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    I have same approach as you, I've met a handful of guys who are speculators and claim to double their money through bitcoin and Tech stock.

    I did read and take up the advise that allocate a small % to spec stocks. Because losing the capital will not change your trajectory but hit a 20 bagger or more can make a difference in long run.

    90% of my share portfolio is in ETF and blue chip (too much exposure to Banks but I'm ok with that), then 10% plus some dividends are spent buying specs
     
  10. PandS

    PandS Well-Known Member

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    I take it as it come but most of my return are from several stock that gone up 10-20 times the money, so going forward to get that sort of return I need to keep digging and find stock that can
    deliver multi baggers, the same rules applied to high return fund, they most driven by stocks that gone up by multiple times, but I am not all greed and after high return.

    My bench mark is 4% dividend 6% capital grow but I work extra hard to exceed that but I settle for that.

    I also have reasonable strategy to protect my capital and safe guard my massive return as well.
    so all my hard work can not be undone with whatever lurking around the corner.

    Once I get massive return, I enact my capital safe guards strategy and cashing out and putting in solid foundation that I know will last even with market crashes, be it ETF or many of the business run by our billionaire where their fortune is ties to that business.

    it not a perfect setup but I try to do what I can within my control to maximise the benefits, it could be a whole lot of lucky run I got but I truely never know so I just do what I do with good risk management.

    as it goes I start cashing a fair bit of my crazy return stocks then I start safe guard them into Kerry Stokes SVW around $16 bucks, The Wilson Family REH holding under $10 and the Munzes family RWC at $3.50, it run hard they sold out and it crashed, I re-evaluate the business and I still think it is a good business that can stand the test of time, so I stick by it, eat dividend and run with the American Economy same with the Wilson Family expansion into America but the Wilson family is multi-generation runner, they wont go any where soon out of REH holding.

    I have a list of these family business that I know very well and when it get to a certain price I buy and I buy big.

    I have no doubt the money I put in these select few family business not only safeguard my capital but also should out perform the index by a good margin over 10 years plus time frame.

    once the capital is in safe hand I do leave a reasonable amount of capital to stick to my my old way, looking for stocks that delivered me multi baggers.

    on top of that I play options market like no other, I devise a strategy where most of the time I get free premium that add an extra 3-5% to my return.

    I keep repeating the same thing over and over again, rules by process, disciplines and strategy and never fear, I action when the price and the risk is right wether we in a bear a bull market or crashes, the good thing about crashes my portfolio is temporary get a hit but my target hit list is really cheap to buy and should deliver awesome return in future years
     
    Last edited: 14th Jan, 2020
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  11. mistercoffee

    mistercoffee Well-Known Member

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    If you owned $1.5m (that seems to be the magic number around here) worth of AFI shares at the start of Last year, the market value of those shares would have increased by more than $300,000 by the start of this year. No risk, no gambling. But I wouldn't sell them: the ongoing income would be too sweet.
     
  12. Big A

    Big A Well-Known Member

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    Nice. You seem to have a good strategy and know what you are doing. I would have no chance of outperforming anyone or anything. My understanding of equities is very limited. So I donate a 1% fee to the fund managers so they can take care of the active part of my portfolio.
     
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  13. SatayKing

    SatayKing Well-Known Member

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    It's the result of that number being in a investment thread of over 30 pages which has an interesting story but no one is aware of the outcome.
     
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  14. Big A

    Big A Well-Known Member

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    So that's a 20% or over return from AFI last year.

    While I don't own $1.5mill of AFI I did have money in the Aus index and an active Aus fund. I believe Aus index returned 23% and Hyperion did 30%. On the international side I had mostly active funds. The 2 largest held funds being Magellan and IFP. and they returned 28% and 29% last 12 months. Happy with those results. Not sure that those numbers are indicative of the average annual returns.
     
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  15. mistercoffee

    mistercoffee Well-Known Member

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    I think the share price of AFI increased by over 25% over the year. But the important figure - the income from those shares over one year - would have been around $86,000 (including franking credits but excluding the big special dividend). Nothing wrong with passive investment.
     
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  16. sfdoddsy

    sfdoddsy Well-Known Member

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    If you take the calendar year, it would have been awfully hard to not look like a guru with any non-stupid investment.

    VAS returned $360k on $1.5 million.

    VGS returned $375K.

    Diversified VDHG returned $325K.

    Boringly balanced VDBA returned $230k.

    Heck, even 100% bonds via VAF returned $125K.

    I’m tickled pink by the returns I’ve got since lump summing in May, but I don’t expect them to continue.
     
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  17. Big A

    Big A Well-Known Member

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    So are you saying the great returns I achieved last year aren't a result of my investing genius?
    And here I was thinking maybe I should start my own managed fund after achieving 20% plus returns last year.

    I already had the Name " Big A's wholesale value plus maximum return equities fund. "
    PC members get a mates rates on fees of only 3%p.a plus a 50% performance fee for returns over my set benchmark of anything above a negative return. Limited room available so get in quick. :D
     
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  18. SatayKing

    SatayKing Well-Known Member

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    Income only or combination? CG can disappear in a flash but money hitting my bank accounts doesn't - unless the Guvment gets some hair brained idea.
     
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  19. sfdoddsy

    sfdoddsy Well-Known Member

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    You could certainly do what, say, Investsmart do and quote returns against a basket of active funds and not mention you are simply following the index.
     
  20. sfdoddsy

    sfdoddsy Well-Known Member

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    Those are total returns according to Sharesight.