Latest SPIVA Scorecard (Active Fund Mgrs Vs the Index)

Apart from speccies (TPM thanks @The Falcon) my best performers based on share price without dividends:
1. VGS
2. PMC
3. FGG

With dividends PMC may close the gap on VGS but VGS is my only international exposure and it is ahead by a fair way.

The problem with choosing a particular fund manager is the risk they won't perform. By sticking with the index you are guaranteed that your performance will beat most active funds.

It's like playing bad hands in poker, you may win but it isn't the mathematically best option.

 

From memory after fees for funds but not for the index. But index fund fees for the main comparison indexes are peatnuts anyhow.

 

Withe the prior being said re: VGE & VAE, who knows what the future holds, emerging markets have outperformed previously and will probably do so again in the future

 

Yes but sometimes the wait can be a long one which mightn’t suit a retiree. However if one is silly enough to believe what some supposed experts say it’s been suggested that as the major constituents of these EM indexes become more integrated into the world economy and their markets mature the performance will be closer to that of developed markets with similar correlation.

Also I’ve often seen it mentioned that more conservative investors consider ASX as a stable liquid proxy for China given the strong trade connection especially with resources. There’s the other argument that the rising middle class in China will lead to a more consumer driven economy but that’s where the previous argument applies with China then behaving more like developed economies / markets.

One thing I haven’t really seen mentioned much is given China’s one child policy for many years until recently and their huge population there must be quite a high percentage of elderly in the country which might be a drag on growth? Has anyone read much on this as given I don’t invest much in EM, I’ve never really researched this area much?

 

@Nodrog China runs into serious demographic problems post 2030-2040. Expect scrambling to increase birth rate, additional kids will likely be an important marker in the new social credit system. Unfortunately, I don’t think you can’t turn these things on and off like a tap after you have a population that has become enamoured with the sole pursuit of loot.

 

Thanks mate.

Interesting comment and in a similar vein to an interview with Bill Bernstein recently:

 

Using Vanguards VEIEX (Emerging Markets) and VFINX (S&P500) as proxies for interests sake only, I had a quick look at various time periods starting with $10k invested 100% in either market, over the period 2000 to 2010 the results were...





Change that to 2000 -2018 and its





1990 to 2018

 

Fascinating!
I presume that excludes income? Which would be a good 2%+ for S&P and much less for EM?

 

@Pleep
Probably similar for each

 

Can you do a 50/50 or 80/20 portfolio with annual rebalancing?

Effects on returns and drawdowns would be very interesting.

 

Can do...

 

"sole pursuit of loot" - classic @The Falcon

With increasing population at what point are we going to all need to sleep standing up?

 

Interesting to see even the Future Fund is taking a more passive approach:

I nominate @Redwing as the next FF chairman.

 

Groan.

Three key issues with S&P’s index v passive scorecard - Cuffelinks

 

Tbh.. the third point made is reasonable.

I think this because I have read a few pieces of academic research that have concluded that professional active does add value (gross of fee).. which suggests the biggest issue is not that they are incapable of adding value, but simply that the cost of the value adding has been too high. So I do imagine if you reduced the sample size by excluding the frankly ridiculous older closet index but charge 2%pa funds and all the insanely priced "retail" funds the gap between active/passive probably narrows considerably.

 

And Swedroe discussing US SPIVA Data:

Swedroe: ‘The Loser’s Game’ Reaffirmed | ETF.com

Does Past Performance Matter?
The Persistence Scorecard
https://us.spindices.com/documents/spiva/persistence-scorecard-september-2018.pdf