Performance Update for Colm Fagan's ARF

Can't see any glaring flaws.
Interestingly the dividend yield on the FTSE100 has also stayed fairly constant over that period between 3.1% and 3.3%. So assuming g (the expected growth in prices/dividends has remained constant the ex ante ERP has in general fallen 3.2% if we use the crude formula:
ERP = dividend yield + g - gilt yield. Though maybe just a sign that the gilt yield in 2019 was artificially low and not taken very seriously by equity investors.
Throw into the mix that FTSE 100 grew at 4.6% p.a. over the period vs Phoenix at 3.2% p.a. (5.6% p.a. vs 1.1% p.a. over 10 years) and I am not sure what conclusions can be garnered. :confused:
 
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Thanks Colm - your analysis makes complete sense to me. I struggled pre-Covid with what I considered risky bond and equity markets, due to the incredibly low government long dated bond yields. It seemed to me that bond rates would have to revert to more normal levels eventually. I assumed that this would impact both bond and equity pricing, due to the net present value calculation (like yours above). Instead, prices for long maturity bonds did fall dramatically but equities have continued to rise. This can only be (as you say) because the risk premium has fallen at lot or alternatively because future cash flows have gone up a lot. I guess analysts are saying it is the latter, due to AI? My fear is that it is passive investing that is causing this disconnect but hopefully I’m wrong! I believe that it is impossible to time the markets but struggle with staying invested when values don’t seem to make sense.
 
Sybilla said:
I assumed that this would impact both bond and equity pricing,
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I recall that there was a mainstream argument that whilst QE did not give rise to rampant consumer price inflation as after all it was intended to counter deflationary forces unleashed by the financial crisis. The argument went that the incredibly easy monetary conditions instead fed into asset prices. That's what it looked like to me. So a bit of a mystery that once that pressure valve was released stock prices continued to rise and at least here in Ireland so did real estate prices. Not sure of the relevance of AI for real estate prices.
 
Yes - it is very strange. I think that residential property has probably held up well due to scarcity, demand and the restrictive central bank mortgage lending rules. Also, mortgage rates haven’t moved much (excluding old trackers)
 
Sybilla said:
My fear is that it is passive investing that is causing this disconnect
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I don't think the impact of the massive growth in passive investing is fully understood. Apparently Vanguard have a $trillion passive fund tracking the S&P 500. People have discussed the rather dystopian possibility of the market being 100% passive. We are reminded of our old friend "supply and demand". Take our own MFF. It is set down that this will passively (some would say blindly) track an index. Wind back not too many decades and this was a non existent source of demand. At some time in the distant future all these pension savers will be swinging from being passive investors to being forced sellers - indeed the MFF's lifestyling in common with most DC pension arrangements dictates that this will be the case.
And here's another thing, wandering way off topic. So the dependency ratio rises to 1 to 2 from 1 to 5 or whatever. Does the fact that we have been saving in an equity fund solve that? Only if capital has increased its share of the national cake by 150% (3 to 2). I am talking at the geo macro level of course but does the fact that Irish pensioners are sitting on a lorry load of US equities really immune them from this Armageddon. Anyway we have climate change and possibly WW III to negotiate before that.
Just musing.
 
ILIM Growth Fund is described in the KID as actively managed.

So if you choose the high-risk or lifestyling strategy you will have some element of active management, as it will be spread over all three funds.
 
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Redzer said:
Way out of my depth here
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Aren't we all? That's the fun in it, learning from one another.
Having given it some thought, I think there could be a simple answer, that Phoenix Group has, as they say, been re-rated, i.e., analysts have realised what I've felt for years, that Phoenix Group is almost as good as a gilt in terms of the dependability of future dividends, so they've decided to price it closer to a gilt. The bad news part of that, of course, is that there's no hope of a repeat of the massive increase in price that we've seen over the last 12 months. (The price this time last year was around 510).
 
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As a child, I learned to yank a plaster off with one good tug rather than to prolong the agony by pulling it off bit by bit.

I should have applied that lesson to my share portfolio.

Apple Corporation has been good to me since I went big on it in 2015. At the time, the price seemed ridiculously low, at 13 times earnings (as at end November).

Over the following nine years, earnings grew by 11.4% a year on average, to over 2.6 times their 2015 level. The share price did even better: at end November 2024, it was eight times what it was nine years previously (allowing for a share split).

Why did the price increase so much faster than earnings? Because the price-earnings ratio tripled, from 13 times in 2015 to 39 times in 2024. As a result, despite my selling some of my holding in the interim, Apple represented a quarter of my total portfolio at end November 2024.

In December 2024, I didn’t think that Apple’s prospect were three times better than they were in 2015, so I decided to sell. But I only sold three quarters of my holding, keeping the other 25%. I didn’t have the courage to get rid of it all.

By Friday last, 23 January 2026, the value of my remaining Apple holding had fallen 13.4% since end 2024. Over the same period, my total pension account had earned 15.5%. Oh, if only I’d been braver in December 2024 …..
 
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Colm Fagan said:
Apple Corporation has been good to me since I went big on it in 2015.

By Friday last, 23 January 2026, the value of my remaining Apple holding had fallen 13.4% since end 2024.
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I'd wager that you're still up! No fear of you :). That horse is still in the race and there's still a long way to go.
 
I always think of Colm’s ARF firstly now whenever Novo are in the news…

Novo Nordisk was the big mover, tumbling 17.17 per cent after saying it expects sales and operating profit in 2026 to fall year-on-year, strained by price pressures in the U.S. as it ⁠battles a competitive weight-loss drug market.

“Even though demand for weight loss drugs is expected to continue ‌to soar, ‍it’s just the fact that there are many more new entrants and there’s a demand for cheaper pricing. So whereas Novo was the top dog, there are so many others biting at its heels and bringing it down,” said Susannah Streeter, chief investment strategist ⁠at Wealth Club.
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I hate admitting my mistakes - even to myself. That may explain why it took me years to realise a loss I knew was inevitable on one of my longest standing but thankfully one of my smallest investments. Like Mr Micawber, I kept hoping that something would turn up. It didn't.

More than 25 years ago, I bought shares for my pension fund in a regional UK property company, Town Centre Securities. At the time, it was fashionable for pension funds to own a sprinkling of property. I wanted to be fashionable.

A big attraction was that I acquired the underlying assets at a discount to Net Asset Value (NAV). The discount at the time was around 30%, as I recall.

The problem though was that the discount to NAV got wider over time, not narrower. When reporting the 2024 results, the chairman bemoaned the fact that it had widened to 50%. We all hoped it would get narrower.

Earlier this week, I finally gave up hoping. I sold my entire holding at a 55% discount to NAV.
 
You should have offered to buy the property ;)

Or, horror of horrors, perhaps the NAV is overstated for these funds but they are unwilling to accept that and write down the value
 
jpd said:
Or, horror of horrors, perhaps the NAV is overstated for these funds but they are unwilling to accept that and write down the value
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You could be right, but the results announcement included the following statement:
"The fair value of the Group's portfolio of investment and development properties, freehold car park properties and freehold hotel
properties have been determined principally by independent, appropriately qualified external valuers CBRE. The remainder of the
portfolio has been valued by the Directors."
As far as I can see, around 99% were valued by CBRE.
Shares in property companies are always at a significant discount to NAV. At present, the discount seems to be much wider than it was historically.
 
The NAV is discounted because of the inherent delays in liquidating property assets - I'd say this represents 5-10 % of the discount. They rest is because investors don't believe the valuations CBRE are giving.

CBRE are not exactly independent - it's very much a closed shop I'd say

Their valuations are usually based on the rental value of the property divided by the expected yield - so plenty of variables to play with there

The only real valuation comes when they sell a property - and directors of property companies are reluctant to do this when the real, market valuation falls short of their imagined valuation
 
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