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How time affects the rules-based v active funds debate

Stocks and Shares ISA , Choosing funds for ISA's, risk factors for funds etc
Investment strategy discussions not dealt with elsewhere.
StepOne
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Re: How time affects the rules-based v active funds debate

#193624

Postby StepOne » January 15th, 2019, 9:31 am

Any chance we can stop beating up Rob every time he posts? The '64%' figure is not crucial to his argument. He is just suggesting that active funds change manager frequently, so you shouldn't judge them over long time periods.

He seems to get a pretty rough ride every time he sticks his head over the parapet and I don't think it's entirely justified.

Cheers,
StepOne

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Re: How time affects the rules-based v active funds debate

#193640

Postby mc2fool » January 15th, 2019, 10:39 am

StepOne wrote:Any chance we can stop beating up Rob every time he posts? The '64%' figure is not crucial to his argument. He is just suggesting that active funds change manager frequently, so you shouldn't judge them over long time periods.

He seems to get a pretty rough ride every time he sticks his head over the parapet and I don't think it's entirely justified.

In the OP he said:
OhNoNotimAgain wrote:Elsewhere on the site a comment was made that it is best to judge funds over the longest possible period and that 3 years is too short a period to form a view.

That sounds sensible until one looks at the underlying data.

And then went on to use the so-claimed "underlying data" to numerically demonstrate his assertions. However, the "underlying data" he's using not only doesn't demonstrate his assertions but self evidently doesn't do so on just the most cursory examination.

But despite that being pointed out he continued to use the so-claimed "underlying data" as justification, and when someone repeatedly misinterprets/misuses data then criticism of that is, IMO, entirely justified. It's not personal.

OhNoNotimAgain
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Re: How time affects the rules-based v active funds debate

#193708

Postby OhNoNotimAgain » January 15th, 2019, 1:23 pm

mc2fool wrote:And then went on to use the so-claimed "underlying data" to numerically demonstrate his assertions. However, the "underlying data" he's using not only doesn't demonstrate his assertions but self evidently doesn't do so on just the most cursory examination.

But despite that being pointed out he continued to use the so-claimed "underlying data" as justification, and when someone repeatedly misinterprets/misuses data then criticism of that is, IMO, entirely justified. It's not personal.


You are focussing on a detail which does not change the main argument that managers of active funds change, and hence the process they use changes, making comparsisons invalid with passive or rules based funds for those that have. That discrepancy increases over time as the data shows.

The fact that you ignored the bigger story that the cohort of passive funds outperformed all active is perhaps more telling and why you are keen to shift the debate.

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Re: How time affects the rules-based v active funds debate

#193725

Postby mc2fool » January 15th, 2019, 2:02 pm

OhNoNotimAgain wrote:You are focussing on a detail which does not change the main argument that managers of active funds change, and hence the process they use changes, making comparsisons invalid with passive or rules based funds for those that have. That discrepancy increases over time as the data shows.

The fact that you ignored the bigger story that the cohort of passive funds outperformed all active is perhaps more telling and why you are keen to shift the debate.

But the data you've presented doesn't show that. It tells you nothing about the relationship between managers and processes, nor why that would necessarily make comparisons with passive funds invalid, as Lootman has explained (and I didn't see any point in repeating).

I haven't "ignored" anything, nor tried to "shift the debate". That passive funds overall outperform active funds overall is well known, hardly news, and is kind of obvious as most active funds have higher charges & costs than most passive or rules based funds. Of course there are exceptions :D.

I've just pointed out the errors in your interpretation of the data you presented as evidence. What you think is "telling" about that I'm not sure; I don't have any particular agenda to push, and as far as skin in the game goes, I have more invested in passive/rules based funds/ETFs than I do in active collectives, so any implication of yours of me being against passives is also evidence free.


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