There is a mutual fund in the US, Voya Corporate Leaders Trust, that never sells stocks and it has been running since 1935. Its strong performance seems to counter the conventional wisdom that buying individual stocks is loss-making. Do you any academic papers on this buy and never sell strategy?Everything I've read suggests that people are terrible at picking individual shares.
And that even funds where they try to beat an index in the long run do worse than the index.
This leads me to believe that one should invest in a low cost index tracking fund.
The Corporate Leaders Trust (aka the "sloth fund") is the poster child for a buy-and-hold strategy where turnover (and therefore trading costs) are kept to a minimum.There is a mutual fund in the US, Voya Corporate Leaders Trust, that never sells stocks and it has been running since 1935
Do you think there were many other funds with the same strategy that didn't make it, leading to survivor bias here?The Corporate Leaders Trust (aka the "sloth fund") is the poster child for a buy-and-hold strategy where turnover (and therefore trading costs) are kept to a minimum.
And it's true that the sloth fund has marginally outperformed the S&P500 over the last 40 years.
However, the original stocks that made up the sloth fund weren't picked at random. The fund promoters invested in an amount of stocks of the 30 largest publicly traded companies at the time by market capitalisation. The idea was that if a company could survive the worst years of the Great Depression, it could survive anything. Financials were excluded.
Well, I'm not aware of any other fund that followed this precise strategy and I don't think anybody would try and construct a fund on this basis today.Do you think there were many other funds with the same strategy that didn't make it, leading to survivor bias here?
I see. I guess if it is hard to know if many other funds existed like this but fizzled out in the 1940s, 1950s, 1960 etc. What I am trying to understand is if buying a basket of stocks is a reasonable alternative to passive funds. Many diehard passive people would say that not it is not a reasonable alternative, how I feel compelled by Irish taxes to find some kind of alternative.Well, I'm not aware of any other fund that followed this precise strategy and I don't think anybody would try and construct a fund on this basis today.
But survivor bias is definitely relevant in comparing stock picking strategies to a purely passive approach.