The Index Funds Challenge

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Nomad
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The Index Funds Challenge

Post by Nomad »

There seems to be a great deal of confidence in the wisdom of investing in low cost trackers funds.

I would like to challenge advocates of these funds to list the index funds they use, and what they are worth today in a specified monetary unit.
Then we can see how they do over time and compare them to some actively managed funds I will we suggest as alternatives.

I just noticed that we are nearly into Autumn, we can check on progress with each changing season.
Last edited by Nomad on Thu Sep 19, 2019 6:34 pm, edited 1 time in total.

Seppia
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Re: The Index Funds Challenge

Post by Seppia »

Great idea.
I’ll take a low fee World ex-USA, vanguard’s VEU works.
100% weight.
Time horizon should be ideally 10 years
Obviously we should measure total return, net of fees.
I would also say that allowed entries must be funds/etfs that are open for investment, so not stuff like Renaissance’s employees only fund for example.

Nomad
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Location: UK

Re: The Index Funds Challenge

Post by Nomad »

Ok, the VEU fund according to Yahoo finance is:
$50.61 or £40.58

To mimic a worldwide fund without any US stocks I will go with four funds at 25% each.
Fidelity European class W (Accumulation) = £17.91 ( fees = 0.92% ).
Lindsell Train UK Equity (Accumulation) = £1.9954 ( fees = 0.51% ).
Lindsell Train Japanese Equity class B (Income) = £2.8045 ( fees = 0.73% ).
First State Greater China growth class B (Accumulation) = £10.1758 ( fees = 1.0 %)
Last edited by Nomad on Fri Sep 27, 2019 3:21 am, edited 2 times in total.

Nomad
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Location: UK

Re: The Index Funds Challenge

Post by Nomad »

If someone wants to go with a global tracker fund including US companies, I have a very simple option in response.
Any takers for a global low-cost index fund?

zocab
Posts: 29
Joined: Fri Jul 26, 2019 1:04 pm

Re: The Index Funds Challenge

Post by zocab »

Nomad wrote:
Wed Sep 18, 2019 7:05 pm
If someone wants to go with a global tracker fund including US companies, I have a very simple option in response.
Any takers for a global low-cost index fund?
VT seems to be the global index of choice for many people. (That said, it's actually cheaper to get the exact same exposure by comining VTI + VEU instead of VT, but the differences are likely to be negligible.)

Nomad
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Location: UK

Re: The Index Funds Challenge

Post by Nomad »

zocab wrote:
Thu Sep 19, 2019 11:07 am
VT seems to be the global index of choice for many people. (That said, it's actually cheaper to get the exact same exposure by comining VTI + VEU instead of VT, but the differences are likely to be negligible.)
Ok, challenge accepted.

VT is today $78.18 or £60.73 and has fees of (0.09%)

The global funds I pick are:
50% Fundsmith Equity currently £4.6755 (fees are 0.95%)
50% Lindsell Train Global Equity currently £2.7485 (fees are 0.5% with my broker)

Let battle commence.

Gilberto de Piento
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Re: The Index Funds Challenge

Post by Gilberto de Piento »

The MMM crowd loves VTSAX. I own a little. How about that one?

steveo73
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Re: The Index Funds Challenge

Post by steveo73 »

Index funds and prices below:-

VGS:- 78.71 (International Equities Tracker)
VAS:- 86.74 (Australian Equities Tracker)
VAF:- 52.72 (Australian Bonds Tracker)

I have no idea how you are going to make this a challenge though. I'm in Australia and all those funds are in AUD. You'd also have to carry the challenge on over 30 odd years. We already now how this turns out anyway - the index wins. We saw Warren's bet on this recently and the active traders were decimated.

Nomad
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Location: UK

Re: The Index Funds Challenge

Post by Nomad »

Gilberto de Piento wrote:
Thu Sep 19, 2019 7:35 pm
The MMM crowd loves VTSAX. I own a little. How about that one?
Ok. VTSAX is today $74.35 which is £59.14

My alternative is this fund:
100% Investec American Franchise class I Accumulation GBP which today is (£3.2148 fees are 0.83%).

That is three comparisons on the go.

Nomad
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Location: UK

Re: The Index Funds Challenge

Post by Nomad »

steveo73 wrote:
Thu Sep 19, 2019 10:08 pm
Index funds and prices below:-

VGS:- 78.71 (International Equities Tracker)
VAS:- 86.74 (Australian Equities Tracker)
VAF:- 52.72 (Australian Bonds Tracker)

I have no idea how you are going to make this a challenge though. I'm in Australia and all those funds are in AUD. You'd also have to carry the challenge on over 30 odd years. We already now how this turns out anyway - the index wins. We saw Warren's bet on this recently and the active traders were decimated.
I can't offer an actively managed alternative to VAS or VAF.

However, my alternative to VGS is the two Global funds I mentioned earlier.

VGS price of 78.71 (Australian) is 42.6 (GBP).
Actively managed alternatives are:
50% Fundsmith Equity currently £4.6755 (fees are 0.95%)
50% Lindsell Train Global Equity currently £2.7485 (fees are 0.5% with my broker)

Seppia
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Re: The Index Funds Challenge

Post by Seppia »

Nomad wrote:
Wed Sep 18, 2019 6:58 pm
Ok, the VEU fund according to Yahoo finance is:
$50.61 or £40.58

To mimic a worldwide fund without any US stocks I will go with four funds at 25% each.
Fidelity European class W (Accumulation) = £17.91 ( fees = 0.92% ).
Lindsell Train UK Equity (Accumulation) = £4.8816 ( fees = 0.65% ).
Lindsell Train Japanese Equity class B (Income) = £2.8045 ( fees = 0.73% ).
First State Greater China growth class B (Accumulation) = £10.1758 ( fees = 1.0 %)
Great.
Couple of details:

1- what's the currency of refrence? It could matter as the weighting is different between our two allocations. I suggest we use the USD.
2- we will obviously compare total return (meaning including dividends for my fund and for your Japanese Equity fund), as otherwise we'd be comparing apples to oranges (your other funds automatically reinvest the dividends and reflect them into the price)

Nomad
Posts: 303
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Location: UK

Re: The Index Funds Challenge

Post by Nomad »

Seppia wrote:
Fri Sep 20, 2019 1:49 am
Great.
Couple of details:

1- what's the currency of refrence? It could matter as the weighting is different between our two allocations. I suggest we use the USD.
2- we will obviously compare total return (meaning including dividends for my fund and for your Japanese Equity fund), as otherwise we'd be comparing apples to oranges (your other funds automatically reinvest the dividends and reflect them into the price)
1. I quoted GBP because that's my local currency. We could list the values in US dollars too, even though we don't have any US investments.
As long as the conversions are made on the same day it doesn't matter.
2. Yes. You will need to supply appropriate details.

Nomad
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Location: UK

Re: The Index Funds Challenge

Post by Nomad »

Correction. I had the price of Lindsell Train UK Equity (Accumulation) incorrect on the original post. Also, the fee was incorrect.
I think I was looking at something entirely different.
This is the correct one.
https://markets.ft.com/data/funds/tears ... FLM156:GBX

https://www.fundslibrary.co.uk/FundsLib ... rJiM3f&r=1

Nomad
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Location: UK

Re: The Index Funds Challenge

Post by Nomad »

Just the current numbers for today but notionally this is for Autumn 2019.
I think we will have some difference in Winter or Spring.

Autumn 2019 27/09/19

Vangaurd VEU ($) 50.07
Vangaurd VEU (£) 40.75

Fidelity European class W (£) 17.98
Lindsell Train UK Equity (£) 1.9827
Lindsell Train Japanese Equity (£) 2.88
First State Greater China growth (£) 10.0363

Vangaurd VT ($) 75.02
Vangaurd VT (£) 61.04

Fundsmith Equity (£) 4.7124
Lindsell Train Global Equity (£) 2.7306

Vangaurd VTSAX ($) 73.57
Vangaurd VTSAX (£) 59.86

Investec American Franchise (£) 3.2311

Vangaurd VGS (Au) 78.34
Vangaurd VGS (£) 43.16

Nomad
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Location: UK

Re: The Index Funds Challenge

Post by Nomad »

Numbers update, hmmm columns not preserved.

19/09/2019 27/09/2019 25/01/2020


VEU £40.5800 £40.7500 £41.1800

Fidelity European £17.9100 £17.9800 £18.8400
Lindsel Train UK Equity £1.9954 £1.9827 £1.9653
Lindsell Train Japanese £2.8045 £2.8800 £2.8994
First State China Growth £10.1758 £10.0363 £10.6977


VT £60.7300 £61.0400 £62.6600

Fundsmith £4.6755 £4.7124 £4.9193
Lindsell Train Global Equity £2.7485 £2.7306 £2.6575


VTSAX £59.1400 £59.8600 £62.2100

Invested American Franchise I £321.4800 £3.2311 £341.6700

VGS £42.6000 £43.1600 £44.2200

Fundsmith £4.6755 £4.7124 £4.9193
Lindsell Train Global Equity £2.7485 £2.7306 £2.6575

Nomad
Posts: 303
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Location: UK

Re: The Index Funds Challenge

Post by Nomad »

Ok, the results are in.

The active/passive funds challenge ran for 256 days through one of the most turbulent economic periods in
living memory.
What are the results comparing 1st June 2020 prices to 19th September 2019 prices?

19/09/2019 27/09/2019 25/01/2020, 01/06/2020


VEU £40.5800 £40.7500 £41.1800, £37.7000 ( overall drop of -9.56% )

Fidelity European £17.9100 £17.9800 £18.8400, £18.1200 ( +1.17% )
Lindsel Train UK Equity £1.9954 £1.9827 £1.9653, £1.8164 ( -8.97% )
Lindsell Train Japanese £2.8045 £2.8800 £2.8994, £3.0524 ( +8.84% )
First State China Growth £10.1758 £10.0363 £10.6977, £10.4949 ( +3.14% ) (overall 1.04%)

Active wins +1.04 to -9.56%


VT £60.7300 £61.0400 £62.6600, £58.42 ( -3.8% )

Fundsmith £4.6755 £4.7124 £4.9193, £4.0241 ( 7.58% )
Lindsell Train Global Equity £2.7485 £2.7306 £2.6575, £2.6558 ( -3.37% )(overall 2.11%)

Active wins +2.11 to -3.8%


VTSAX £59.1400 £59.8600 £62.2100, £59.94 ( 1.35% )

Invested American Franchise I £321.4800 £3.2311 £341.6700, £353.8400 ( 10.07% )

Active wins +10.07% to 1.35%


VGS £42.6000 £43.1600 £44.2200, £42.2100 ( -0.92% )

Fundsmith £4.6755 £4.7124 £4.9193, £4.0241 ( 7.58% )
Lindsell Train Global Equity £2.7485 £2.7306 £2.6575, £2.6558 ( -3.37% )(overall 2.11%)

Active wins +2.11% to -0.92%


That is 4 wins for Active funds vs Passive funds and the average active fund performance was +3.83%
and the average passive fund performance was -3.23%

Seppia
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Re: The Index Funds Challenge

Post by Seppia »

you either track correctly or you don't.
VEU had around 1gbp in dividends since the first posting date
Still losing, but over 10 years not counting the dividends is a big deal

Nomad
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Re: The Index Funds Challenge

Post by Nomad »

Seppia wrote:
Mon Jun 01, 2020 3:23 pm
you either track correctly or you don't.
VEU had around 1gbp in dividends since the first posting date
Still losing, but over 10 years not counting the dividends is a big deal
So the VEU fund is an income fund not an accumulation fund?

Turns out the Lindsell Train Global Equity fund is an income fund too I have not included those extra payments.
Last edited by Nomad on Mon Jun 01, 2020 3:37 pm, edited 1 time in total.

Seppia
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Re: The Index Funds Challenge

Post by Seppia »

yup it is. Also the dates you're considering miss the largest dividend of all (around july).
I don't mean to be rude but regardless of what you stated
Nomad wrote:
Fri Sep 20, 2019 2:03 am
You will need to supply appropriate details.
If you want to run a comparison thread it is your responsibility to get the numbers right.

I personally will be interested in the results starting 7-8 years from the start.
less than 1 year is fairly irrelevant but meaningful as we keep this thread updated.
I am also tracking myself VS an index (I do have an active allocation) since 2016 or so, and depending on the years I've been either up a lot or down a lot.
Now I'm about even

Nomad
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Location: UK

Re: The Index Funds Challenge

Post by Nomad »

Seppia wrote:
Mon Jun 01, 2020 3:37 pm
yup it is. Also the dates you're considering miss the largest dividend of all (around july).
I don't mean to be rude but regardless of what you stated

If you want to run a comparison thread it is your responsibility to get the numbers right.

I personally will be interested in the results starting 7-8 years from the start.
less than 1 year is fairly irrelevant but meaningful as we keep this thread updated.
I am also tracking myself VS an index (I do have an active allocation) since 2016 or so, and depending on the years I've been either up a lot or down a lot.
Now I'm about even
Picking an income fund rather then an accumulation fund is not a smart approach as it is very difficult to track dividend payments. Therefore, we can't include VEU in the figures.

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