The Lemon Fool

Total annual return +12.1% last 12 months.

Done well in CV crash, because of high US weighting 68.4% and high weighting in tech, software and pharmaceuticals. An ongoing charge 0.14%.

it has outperformed my tracker. What do you think as a passive fund? would you expect too 100 to continue to outperform? Any downsides? Cheers

Big bet on a handful of companies due to weightings

12 months performance is pretty meaningless but it will have done well as the biggest companies are the ones doing well and dragging the market with them

If that reverses?

Not for me. Maybe if it was equal weighted it might be more appealing. I’d rather have an all world tracker if I’m going passive

I suppose a plus point would be that if we’re going to have an economic meltdown are these companies more likely to a) survive b) make profit. I would imagine the answer is yes to those

Interesting one though

fca2019 wrote: What do you think as a passive fund?

I think there are degrees of passive, unlike pregnancy.
This index takes its constituents from S&P's broader 1200 index which is comprised of 500 US, 350 EU, Asian and Australian top stocks etc. So it’s quite a bit narrower and thus less diversified; you take more of a gamble on finishing up ahead or behind the 1200 index, with some research suggesting behind is more likely with the differences modest.
There are criteria for selecting from the 1200 to get the 100: internationalisation of company income and assets; size; sector balance. Those, and any other criteria that might exclude a company from the index are bets on what will outperform the market as a whole. These not big bets, but they’re bets.
Currently there seems to be only one Australian company, BHP in the 100 index. It’s a great company paying 6% dividend but no price change for ten years. Meanwhile, CSL, a biotech and the biggest company on the same exchange has had a price increase of 94 %/year on average for the last decade; that’s 25%/year compound growth. It’s not in the LG Global 100.
And for that, you pay 0.14% management fee which doesn’t sound low.

The thing with trackers is to hold them forever
Investors-especially amateur ones find this very difficult to do
The urge to tinker is almost impossible to resist
Get a broad based tracker-personally I use a World Index Tracker Fund and leave it alone
Cheap,simple to understand
Concentrate on your day job where you do have control
Half your portfolio performance will come from the monies you invest
Enjoy your wife and kids
That’s it-very boring!
xxd09

Last 12 months SPY (US S&P500) + 9.5% in $ % terms, £/$ benefit from holding US$ for a UK investor +4%, so combined benefit/gain for a UK investor = +14%.

Expect that to continue? Well with the Fed now having the authority to buy up to 70% of each/any Corporate Bond issue such QE could inject $8T of newly printed money into such bonds, which has investment funds reducing higher priced/valued bonds to buy stocks, so stocks are up. The fear of CV-19 has also seen the flight to safety (US$). That could sustain, could flip around. Best is to diversify, perhaps 50/50 SPY and UK FT All Share.

All stock or stock and bonds? Some like 50/50 stock/bond, a variant of that is 25% each US stock and gold, UK stock and UK T-Bills, so around 50/50 £ and foreign currency diversification (US$ is the worlds primary reserve currency, gold is a form of global currency (as well as being a commodity)).

Since the start of 1994 that yearly rebalanced asset allocation has provided around 5% annualised real (after inflation) total return. Where the dot com bubble decline, -3% in 2001, -9% in 2002, followed by +12.5% in 2003 rebound, was the greatest impact since the start of 1994. 2008/9 financial crisis was a non-event for the portfolio, as has CV-19 been ... so far.

After withdrawal of a 2% SWR (2% of portfolio drawn at the start, then uplift that by inflation each year as the amount drawn in subsequent years, so a regular inflation adjusted 'dividend'), the remainder of the inflation adjusted portfolio value has grown ...

at a 3.5% annualised real rate, so opportunities to top-slice additional income ('dividends') to supplement the SWR.

The above are all calendar year figures, better for a UK investor to review/rebalance once/year around the end/start of the fiscal year (5th April) as that way you can opt to rebalance in the old, new or a combination of both according to whichever might be the more tax efficient. Between times, as xxd09 said, forget about it. If another dot com type event occurs any dips will tend to be recouped in a later year (or have been preceded with a above average gain year), or events such as the financial crisis/CV-19 might come and go without hardly being recorded/indicated in your portfolios value. Such are the effects/benefits of diversification.

Want higher returns, then go more with stock-heavy/all-stock and 'enjoy' the Rollercoaster ride along the way. No guarantees that will make more though. Depends upon what timeframe you look at. Being more volatile it will sometimes zig up more, sometimes zag down again https://tinyurl.com/y8qwx8tp

I have this fund in my portfolio (30%) and it cratered in the crash down 25% and it's still slightly down -3% (I think my calcs are off though) whilst all my other funds are up 10% or more. I bought it due to the fact that I liked a lot of the companies it had in its portfolio. I tweaked the holding last month so that it's only 10% and put the money into my other funds which were recovering faster. It's one I will hold for quite some time as now I can forget about it.

Thanks for comments all. Been thinking about it, and I'll go with this as my new core investment going forward. I like the returns during the crash, and the defensive nature of investing in the largest companies in the world, and I think the management charge is cheap if making comparison to commonly purchased investment funds and trusts.

From
https://literature-lgim.huguenots.co.uk ... 0031978918 the yearly % total returns for the fund compared to its benchmark index

.... which compounds out to a 2% annualised difference (10.1% versus 12.1%), as a reflection of the difference after transaction costs, taxes and expenses.

Frankly I'm not generous enough to line other peoples pockets with 2%/year. Yes some cost-to-do-business (invest) is to be expected, but 2%/year is too steep IMO. Maybe acceptable when stock gains are good such that that 2% is less significant - but there will be times when that 2% is perhaps all the gains there are, or maybe less, like 2018, but repeated over a series of years.

Some good info 1invest and good for thought but excluded 2008 and 2020 with big correction in it, may give a different picture.