Personal Assets v Capital Gearing v RICA?

[Hariseldon58]

The problem with saying I expect 5% nominal or 8% nominal, from an Equity portfolio going forward, is that equity returns are very lumpy...

I have run a 90%+ equity portfolio, which I would describe as balanced (well I would , wouldn't I ) and I have had around 12% annual returns since 1990 and over different rolling 10 year periods since then, the returns have been in the same ballpark, but the last tax year produced a zero return and the prior year 30% .I.E. lumpy !

I have no idea what I will get over the next 10 years, but I rather hope to do better than 5%, I do think the next 10 years will be different to the last 6 or 7 years and have moved from an almost totally passive approach, to a much more diverse portfolio, using mainly Investment Trusts.

I was just reading a blog post from an experienced Investor from 4 years ago, saying the good times were coming to an end....it was only when I got to the end, that I realised it was written four years ago, because of the relevance of the commentary to recent events and the generally anticipated future now. Expect the unexpected.

Passive investing is great, everyone says so.....

[Muddywaters]

Over the last couple of years I’ve worked quite a lot on future returns forecasts, or at least overseen a project on it for an investment management company, working with one of the main players in economic modelling, US academics and our in house investment managers, and i’d be happy with 5% p/a average going forward (without allowing for inflation).

I'm not surprised at the number, which might even look quite generous. Could you clarify a few things:

- whether the 5% finger-in-the-air (assumption) is a nominal or real return figure (not clear from your bracketed comment);

- the time horizon that returns forecast applied to;

- which equity market (global or US) your forecasts were predicated on?

-nominal (reasonable assumptions is the term i prefer but ultimately you could file it under a guess)

- long term, 10 years plus. Different forecasts were actually produced for different horizons but I was personally interested in the longer end

- Interbational but each sub asset class had its own predicted return which was then applied to our portfolios. I don’t really want to go into a huge level of detail because it’s commercial info (I accept I raised it in the first place). So large cap Japan would have its own return over x number of years etc etc but it was possible. The 5% figure is a summary indication I think that could be applied an all world tracker, that’s not bang on but not far off given the info available

Anyway there are lots of companies that will apply predicted returns for different risk levels. None that I’ve seen predict returns vastly different

[colin]

Anyway there are lots of companies that will apply predicted returns for different risk levels. None that I’ve seen predict returns vastly different

https://www.sellwoodconsulting.com/2018 ... sumptions/

[tjh290633]

Re: https://www.lemonfool.co.uk/viewtopic.p ... 00#p176500

How are you measuring your return?

TJH

[Aminatidi]

OK so as of now in the one ISA I have:

• Fundsmith 19%
• Lindsell Train Global Equity 19%
• Capital Gearing Trust 19%
• Personal Assets 19%
• Ruffer 5%
• RIT Capital Partners 19%

Percentages near as dammit I'm not that exact

[Dod101]

OK so as of now in the one ISA I have:

• Fundsmith 19%
• Lindsell Train Global Equity 19%
• Capital Gearing Trust 19%
• Personal Assets 19%
• Ruffer 5%
• RIT Capital Partners 19%

Percentages near as dammit I'm not that exact

Well no one can say that you are no conservative in your choices.

Dod

[Aminatidi]

OK so as of now in the one ISA I have:

• Fundsmith 19%
• Lindsell Train Global Equity 19%
• Capital Gearing Trust 19%
• Personal Assets 19%
• Ruffer 5%
• RIT Capital Partners 19%

Percentages near as dammit I'm not that exact

Well no one can say that you are no conservative in your choices.

Dod

The interesting (to me) thing is that it ends up almost 60/40 - hard to be exact as RCP has a lot of "other" according to X-Ray.

If I'd said I'd gone with LS60 would people still say that's conservative or is it a perception about the likes of CGT/PNL/RICA?

[Dod101]

Sorry I do not know what LS60 means but it is more than a perception that the likes of Personal Assets, Capital Gearing Trust and RIT Capital Partners are conservative. I hold only RIT out of those three but not only is it conservative, it has done well in a capital sense over the last several years. Much better than PNL or CGT I guess. Do not know what RICA refers to.

I am not knocking your choices. Depending on your requirements they are probably very good choices and you seem to want capital protection rather than growth so you may well be right. I like Lindsell Train and of course Fundsmith, given its record.

Dod

[Aminatidi]

LS60 = LifeStrategy 60 and RICA = Ruffer

[Aminatidi]

Noticed dod's edit and on "capital protection" I guess I see it more a case of "hare and tortoise" and I'm hoping that that combination I'm trialling should give a reasonably safe steady climb over the long term without the whole lot falling like a stone at the first sign of trouble.

I'll still likely stick a small amount into the likes of SMT at some point but I may explore using the higher risk stuff to "generate profit" and then slice and stick those into the ISA - not sure but I'm just not comfortable having £80K (which it will be in April) sitting in 100% stocks of any kind.

[Dod101]

Moderator Message:
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I know PNL quite well, and its attributes and am therefore aware of its capital preserver status. PNL is the best performer ytd, against what?

I am not looking for a capital preserver, at least not until I have several millions of sterling so that I would want to lock up a meaningful proportion of my wealth in PNL. Otherwise what is the point?

Dod

[OhNoNotimAgain]

Moderator Message:
referenced quote deleted at posters request.

Not really, it is nearly 2% behind a UK dumb tracker over 5 years and 10% behind over 3.

[Aminatidi]

Moderator Message:
referenced quote deleted at posters request

Not really, it is nearly 2% behind a UK dumb tracker over 5 years and 10% behind over 3.

But it's not meant to compare to a tracker? They use the FTSE as a comparator but not as a benchmark.

If I wanted to track the FTSE I'd... probably buy a FTSE tracker

[Dod101]

Moderator Message:
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The guy was not claiming that. He said 'ytd'.

Dod

[OhNoNotimAgain]

Moderator Message:
referenced quote deleted at posters request.

Tracking the FTSE is the cheapest, simplest and lowest risk way of getting capital market exposure. Anything else has higher risk, complexity and risk.

Unless those factors are compensated by higher returns why bother.

Sure, the managers and directors have a good line in B/S and financial jargon but the fact is that they know no more about the future than anybody else as the historic return demonstrates.

[Lootman]

Tracking the FTSE is the cheapest, simplest and lowest risk way of getting capital market exposure. Anything else has higher risk, complexity and risk.

If and only if the universe of "capital markets" that you are interested in is limited to the FTSE-100.

[OhNoNotimAgain]

Tracking the FTSE is the cheapest, simplest and lowest risk way of getting capital market exposure. Anything else has higher risk, complexity and risk.

If and only if the universe of "capital markets" that you are interested in is limited to the FTSE-100.

Other indices are available.

[gbjbaanb]

Moderator Message:
referenced quote deleted at posters request.

What's it going to be like in the next 3 years?

Past comparisons are useful to a point, but only to a point. Now considering we've had a massive bull market for the last 10 years, anything that is designed for capital preservation will not have done as well. If the next 10 years are not more of the same (and who really thinks the massive bull market will continue over that time period?) then you'll do well do consider others in view of their performance in a bear market.

[scotia]

Moderator Message:
referenced quote deleted at posters request.

But easily beaten by a National Savings Bond - with 100% security.
Even fivers stuffed underneath your mattress would have provided superior capital preservation this calendar year!

[Aminatidi]

So RICA is down 7% in a little over a month.

Impressive...!