Its Not Harry

Comment and opinion for retail investors in the UK

Passives and Trackers

DIY Investing – does it pay off?

by Leave a Comment

Readers will have maybe noted that a great deal of the money being invested by retail investors is going into ETFs and most of those, although now a decreasing proportion, will be passive index trackers. In addition, plenty of money goes into mutual funds that are passive, and even model portfolios where the asset allocation may be varied a bit from time to time, but the underlying strategy is largely far from active and trackers are used to get market exposures.

Are we doing well?

The founder of Vanguard, which firm is now one of the largest owners of lsited investments in the world, made his name arguing that paying for portfolio management was a waste of time because the vast majority of managers in the USA failed to beat the S&P 500 index consistently. Now, we all know that is not a very complete rationale (why would the S&P 500 be your sole benchmark?, for instance) but if the index makes enough money over the long term to meet your investment objectives and it can be tracked very cheaply, why not do that? Clearly, a great many people have agreed that was the way to go!

You need to be logged in to view the rest of the content. Please . Not a Member? Join Us

Deep Dive – November 2025

by Leave a Comment

The death on investment funds – long live ETFs!

Around 7 or 8 years ago, during the period when I was working for Headley Financial Services (HFS) after they bought my business ahead of my retirement, I was asked as the most technically qualified member of their investment committee to research and write a report for the committee on the then relatively new asset type of exchange traded funds (ETFs) and their cousins (rarer) ETCs and ETPs.

I don’t have a copy of the report now but I can more or less recall what I concluded, which was that although the likes of Vanguard had succeeded in creating cheap funds that tracked the main widely used stock market indices (by an automatic process – so passively) the market in ETFs had even by then expanded to track all sorts of other indices, including ones made to order, generally but not always at quite low cost. 

You need to be logged in to view the rest of the content. Please . Not a Member? Join Us

Deep Dive – March 2025

by Leave a Comment

Generative AI – Implications for Investors

A discussion with a subscriber recently prompted me to think that investors ought to be thinking now about the real long-term implications of the release into general use of what is loosely called generative AI – software like Chat GPT, Apple Intelligence, Gemini and DeepSeek.

Introduction

The shorthand AI is actually unhelpful because the word intelligence has always been the subject of controversy and debate and even Wikipedia’s opening lines under the heading of Intelligence point out that the definition is wide and has for over a century been a subject of professional debate amongst psychologists rather than philologists. 

You need to be logged in to view the rest of the content. Please . Not a Member? Join Us

Deep Dive – June 2024

by Leave a Comment

KISS – Keep It Simple, Stupid!

The heading is a reference to the mnemonic widely used in training courses, mainly sales and marketing variants, in the latter part of the last century.  Many readers will know it, I am sure, but for those who don’t, the idea is that only simple concepts are readily understood by prospective customers and so if you want them to be attracted to what you have on offer, you need to have a marketing message that conveys simple benefits, like “Persil washes whiter” or “Every little helps”.

It is true that some consumers, like myself, actually enjoy looking into detail and researching products, but I would happily admit that I am attracted to simple solutions in the investment world, knowing that complexity often allows product manufacturers to rip off consumers or permits the disguised conduct of fraudulent, or at least negligent fund management activities that go undetected, as for example happened with split capital investment trusts.

It doesn’t need to be complex – just logical

For Portfolios

Last month’s Deep Dive article listed some options for those who might want to simplify their investment affairs as advancing years make things more difficult.  Here were two of the options:

  • Move to multi-asset funds, either those built with passive index-tracker components, or managed variants.

  • Continue to retain a portfolio of funds, but much simplified, using 6 -10 funds which cover all the main global markets

This month I want to share with you some data that I researched after thinking more about how investors with slightly differing characteristics and objectives might actually go about the process.

I also wanted to do some more validation on my recent affirmation that investing in a way that meets a desire to support sustainable or general ESG objectives would not result in weaker returns and in fact might deliver better results. 

I was especially motivated to do this after reading a trade press report of an IFA who claimed that ESG investing was pointless and a scam.  When opinions about investments are polarized, one can as rule assume that the quiet but active majority (being motivated as a whole by the prime objective of making money) will come out on the winning side – that is in fact the essence of the momentum factor as a driver of investment valuations.  It seems that in Europe at least the majority prefers sustainable capitalism.

In the spirit of the heading, this article is in itself a little shorter than recent monthly missives.  Feedback on your preference for levels of detail is always welcome.

You need to be logged in to view the rest of the content. Please . Not a Member? Join Us

Midweek Musing – is tactical asset allocation worthwhile?

by Leave a Comment

What is tactical asset allocation?

To answer that question we need to start by understanding the preferred starting point of the ‘alternative’ strategic asset allocation. This is the concept of building a portfolio with a range of asset types with varying degrees of correlation so as to achieve returns in line with our objectives at an acceptable level of volatility.

Investment theory developed over many decades suggests that the ‘right’ asset mix will see returns inevitably impacted by short term systemic changes in market direction, but that the worst volatility will be smoothed out in a well designed portfolio and over the long term returns will be reasonably predictable. Because the market’s short term volatility is in effect allowed for in the model asset mix, provided no major cash flows in or out take place, the asset mix can be generally left alone.

The idea of a well diversified long term mix of equities, bonds and maybe property, commodities and cash is the foundation of all multi-asset portfolios although some narrower equity/bond mixes are promoted as low cost ‘risk controlled’ and ”buy and forget’ products by all sorts of invesment advisers from Vanguard and BlackRock with their passive index trackers to expensive wealth management firms with their model portfolio offerings.

Although I started by saying that what I am calling strategic asset allocation is the alternative to tactical asset allocation, that was really not accurate. Tactical asset allocation is an overlay, or development of strategic asset allocation.

You need to be logged in to view the rest of the content. Please . Not a Member? Join Us