Performance of active funds vs ETFs

Sorry what’s the sheer maths and evidence? The fact the selected active fund you posted did an 8.4% annual return while the ETF did a negative 2% pa return?

The data you’ve posted only suggests that by investing in L1 wholesale fund 5 years ago at March 2015, you would’ve strongly outperformed the ETF. Of course you can nit pick any particular year and make a comment.

 

Where do these “scorecards” even come from? And do they include index funds that clip a fee which is basically a passive fund but with more costs? Of course they’re going to underperform the index. Does Vanguard outperform the Index after fees? Hmm What’s in the sample?

 

Of course but when you choose a fund or buy a house, you do DD. It’s not throwing a ball on a roulette wheel.

 

Yes thanks for your insightful input. Now back to about me, lemme tell you the returns I’ve made lol

 

By the way this site you’re using seems pretty strange.

VAS was $76 on 31 March 2015. Now it’s $65. I don’t see how it did a 1.3% IRR over 5 years (which is what your chart says). More like -2% IRR?

 

Total return.

 

What’s the annual dividend like, is it around $1.70? So even at $65 + $1.70 x 5 that’s $73.50. Don’t see how compound return is 1.4%. Still negative

That’s how I DD things and check things...

Anyway minute point. But that’s why I don’t read these third party reports or treat them as gospel. When I used to work for the man, I checked every number straight from the source ... never trusted this stuff. Oh and I thought this was an accumulation index anyway?

 

I will say goodbye to this section of this thread. That’s two threads in a short few days. Seems like go are going in a loop with this section as well.

 

Yea yes yes believe what you will (applies to me too)

 

Isn't the annual dividend typically between $3 and $3.50? What does that do to your DD?

Also, it seems like it's not really DD if you just guess the annual dividend.

 

The other thing is that I'm not sure IRR is a particularly relevant tool for assessing the relative value of one equity vs another.

Generally speaking, the higher a project's internal rate of return, the more desirable it is to undertake. IRR is uniform for investments of varying types and, as such, IRR can be used to rank multiple prospective projects on a relatively even basis. Assuming the costs of investment are equal among the various projects, the project with the highest IRR would probably be considered the best and be undertaken first.

When I am comparing returns, I consider franking credits, which would not really be a factor when calculating IRR.

The other matter is I would not necessarily pick the fund with the highest IRR. We are not all chasing the highest possible returns at any cost. Some of us are investing in accordance with an investment strategy and consistent with our own appetite for risk.

 

I just looked at here

Share Price & Information - ASX

According to the ASX website last one was 67c, and I assume there’s two (interim and final)? But was t sure hence I did pose it as a question. I used $1.70 to leave a bit of leeway also (in your favour)

 

You could calculate the IRR with franking credits and work out a pre-tax number. 2 minute job on excel if you wanted an approximate and probably 10 minute if you wanted exact IRR

 

I believe it is paid quarterly.

Vanguard Australian Shares Index

It's easy to point out the numbers don't stack up when you assume that the dividends are half what they actually are

 

I guess my point is that IRR is not useful to me when selecting an investment for my portfolio.

 

Yea I stand to be corrected on that. I thought it seemed low also. But then I cross checked another site that said $1.50-$2.00. Perhaps I misread it.

 

Sure, it’s a historical number anyway that’s risk-free at that point, and for illustration purposes only. On a forward looking basis youre probably more interested in risk and effort (which is kind of my mindset too) which is fair enough, as no one knows the IRR until after the fact.

 

A classic example of why you need to be so careful when you see early outperformance and no follow through. With no visibility on what size of assets are under management in early days of wholesale funds it so easy to fund multiple strategies. The losing strategies die before ever seeing light of day and winners are marketed before the luck runs out. The retail version and LSF (listed LIC version) that followed the supposed wholesale success have both been complete disasters.

Even the wholesale version if you invested monthly instead of lump summing in at inception date (which wouldn't have been possible to anybody but an insider) Is now underperforming VAS.

 

I think from memory the early days was a few hundred million dollars. Wasn’t a shop sitting around with $500k.