Performance Update for Colm Fagan's ARF

ClubMan said:
That's a false comparison.
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Hi @ClubMan . All analogies are false to some extent, but my point is broadly true. Passive funds are trying to replicate the market.
I must confess, though, that I'm not certain about my assertion that:
Colm Fagan said:
Also, as the chart below* indicates, variations in the fund’s yearly returns compared to a passive portfolio aren’t that great, either in individual years or cumulatively.
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The chart I provided does seem to indicate that's true, but even I accept that one ten-year comparison isn't conclusive. If any AAM readers have figures for returns on a passive fund (or even for an active fund, e.g., Zurich International Equities) over a longer period, I would very much appreciate it. If you'd prefer not to share the figures widely, feel free to send me the information by PM.
On a separate matter, going back to the discussion between @ClubMan and @Duke of Marmalade (#557 above), you're both right to some extent. I bought my first tranches around £260 to £270 a share - a terrible decision - but jumped in and picked up another tranche at under £125 a share. The current price is £173.
 
Colm Fagan said:
If any AAM readers have figures for returns on a passive fund
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This website has extrapolated fund returns from the index returns, which you can download as a .csv

Backtesting for the European index investor

Backtest by Curvo is the best backtesting simulator for European index investors. Discover the historical performance of your portfolio and compare it to others.
curvo.eu curvo.eu
 
Hi @Corola That seems to be exactly what I'm looking for. Thanks.
The figures seem to be in Euros (which is what I want), because of the Euro sign at the side of the graph, but the title of the index indicates USD. Can you confirm that the index is in Euros?
Also, I wonder how much of an adjustment is appropriate to compare with my own ARF's (net of all charges) return. It would seem that I can deduct a minimum of the ARF platform fee (0.4% from 1/1/ 2025, 0.5% plus VAT before that).
 
These days, the tracking error of mainstream index funds is pretty close to zero.

The fund manager obviously charges a (modest) fee for their services but this can be substantially offset, primarily through stock lending activities.

So, I think it’s reasonable to just deduct your platform costs for comparison purposes.
 
So what's the intention here? To prove that @Colm Fagan's actively managed stock picking can beat the index consistently and/or over the medium/long term? Good luck with that if that's the plan... Or is it just to disparage those who take a simple approach to investing and choose a low charging passive diversified index tracker?
 
Colm Fagan said:
Can you confirm that the index is in Euros?
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This fund is an ETF that reports its performance in USD but trades on the stock exchange in EUR. The fund currency is largely irrelevant though and you can use the EUR returns directly.

The returns assume that funds perfectly follow their index (no tracking error), all dividends are reinvested (accumulating), and a total expense ratio is deducted (0.2% for this fund).
 
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ClubMan said:
So what's the intention here? To prove that @Colm Fagan's actively managed stock picking can beat the index consistently and/or over the medium/long term? Good luck with that if that's the plan... Or is it just to disparage those who take a simple approach to investing and choose a low charging passive diversified index tracker?
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I dont think its either and quite frankly your post is obnoxious.
 
jim said:
quite frankly your post is obnoxious.
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Why/how?

Do you find it obnoxious that an actively managed stock picking portfolio won't beat the market/index consistently over the medium/long term?
 
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ClubMan said:
So what's the intention here? To prove that @Colm Fagan's actively managed stock picking can beat the index consistently and/or over the medium/long term? Good luck with that if that's the plan... Or is it just to disparage those who take a simple approach to investing and choose a low charging passive diversified index tracker?
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This post shows a number of misunderstandings:
1. I don't see myself as an active stock picker. I'm a passive (in the sense of buy-and-hold) long-term investor. I don't trade. One of the shares has been in my portfolio continuously for over 30 years, either/and in my pre-retirement fund, my post-retirement fund, and/or in a non-exempt investment account. I reckon that the average holding period for shares in my ARF is over seven years (reminder to self: check the duration and report back). That is as far from "actively managed stock picking" as can be imagined.
2. I'm not trying to beat the index - any index. The aim for each investment is to earn the risk-free return plus the equity risk premium, which I think is around 4% to 5% a year, in the long-term. As I've explained many times, that's why there are no bonds and why the cash element is minimal (typically around 0.5%). Cash has no hope of earning the target return.
3. I was not trying to disparage those who take a simple approach of choosing a low-charging passive diversified index. I am just surprised that the performance of my fund (just 13 shares, chosen without any objective to match an index) is surprisingly close to that of a passive portfolio (subject to further study, as outlined above). If true, that would support my belief that the market (broadly) prices shares correctly, so it doesn't really matter where you invest: you're going to earn much the same long-term return, simply because the market prices shares correctly relative to each other.
 
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Yesterday, I wrote:
Colm Fagan said:
Also, as the chart below* indicates, variations in the fund’s yearly returns compared to a passive portfolio aren’t that great, either in individual years or cumulatively.
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I later qualified that statement:
Colm Fagan said:
The chart I provided does seem to indicate that's true, but even I accept that one ten-year comparison isn't conclusive. If any AAM readers have figures for returns on a passive fund (or even for an active fund, e.g., Zurich International Equities) over a longer period, I would very much appreciate it. If you'd prefer not to share the figures widely, feel free to send me the information by PM.
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@Corola kindly came up with the goods. Thanks again, @Corola.
@Corola's figures indicate that my initial statement was incorrect; variations in returns from a passive portfolio in individual years have been significant.
The chart below seems at first glance to indicate that the initial observation on similarity of returns was correct; however, that's misleading. Figures for 2024 and 2025 make that clear.
At end 2023, the index for my pension fund was 370.74; the ETF index (less platform fee) was 344.06, taking a starting point of 100 at end 2010 for both. In 2024, however, the ETF increased 25% to 430.76 while my ARF only increased 10.6% to 409.95. I presume the difference between the two is mainly attributable to my travails with Novo Nordisk, which have been well documented on this thread. I recovered some ground in 2025 (up 13.1% v up 6.4% for ETF) but slipped back again in the first six months of 2026 (up 4.6% v up 12.8% for index), mainly, I presume, on account of my Goodwin debacle, which, once again, has been well documented.
I'm sure that, if I went back to earlier years, we'd find similar differences.

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As a PS to the above , it's worth stressing again that exercises such as this, comparing my drawdown pension over the last 15 and a half years with an all-equity fund, risk missing the wood for the trees.
There are very few pensioners whose entire pension (excluding SW entitlement) is in equities. More likely, at least 50% - 100% if they bought an annuity - is in bonds.
To show the value of being in equities for that period (with the benefit of hindsight, of course), I've reproduced below the same comparison between my pension and an all-equity ETF, but deducting 6% a year from each. That's the percentage I'm obliged to withdraw. For both, the revised graph shows fund value at end well in excess of the initial amount invested, despite the withdrawals. In reality, my current fund value is more than double the starting amount, mainly because the withdrawal percentage was a bit less than 6% in the earlier years (not obliged to make withdrawals from AMRF portion of ARF) and also because December tended to deliver good returns: the 6% calculation was based on fund value at 1 December. If anything close to 50% of the fund were in bonds, it would be a very different story.

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Colm Fagan said:
I reckon that the average holding period for shares in my ARF is over seven years (reminder to self: check the duration and report back). That is as far from "actively managed stock picking" as can be imagined.
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I've looked at the purchase dates for the 13 shares currently in my pension portfolio, which I'll call A to H in descending order of weighting, with year of purchase in brackets.
Shares A(2014) and B(2025) each represent between 15% and 20%.
Shares C(2018), D(2019 - but held briefly in 2012/13), E(1996), F(2020), G(2026), H(2025), I(2025) each represent between 5% and 10%
Shares J(2025), K(2025), L(2025), M(2019) each represent between 3% and 5%.
0.6% is in cash.
Applying the share's weighting to its year of purchase, I get an average purchase date of late 2018, implying an average holding period of over 7.5 years. That gives no credit for holding share D between 2012 and 2013.
Interestingly, the average purchase date for the top six shares was mid 2016 while the average for the bottom seven was late 2024. That's a big difference. It's as I expected: I like companies to serve a "probationary period" before making a major commitment - although there have been at least two notable exceptions, which I've documented in previous posts - Novo Nordisk and Goodwin
 
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I would be interested to see a bar chart of the shares you currently own that shows the purchase price, current price and what percentage they are up/down since you bought them. If you shared a graph or table like that of your portfolio every six months or year that would be interesting.

Nvidia is one I'm curious how it's working out for you. For a while there it looked like it could "turn Goodwin" on you but I think it's up a lot now since you bought it and I suspect worth holding. Even Goodwin is slowly recovering I see.
 
CharlieMac said:
I would be interested to see a bar chart of the shares you currently own that shows the purchase price, current price and what percentage they are up/down since you bought them. If you shared a graph or table like that of your portfolio every six months or year that would be interesting.
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I'll think about it, but it's not straightforward. Take for instance the share I bought first in 1996; how would I show its performance since I bought it?!
Also, some are "growth" and some are "value" shares, i.e., low/zero or high dividend payers (even though I dislike the terms - I hope that every share will deliver value). Should dividends be included in the comparison?
However, there probably is a meaningful way to tackle your question. I'll think about it.
As an aside, one of my best-performing shares ever was Apple, which is no longer part of my portfolio.
 
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Fortune said:
A comparison to a more 'typical' retirees fund choice would be interesting
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@Fortune, your wish is my command (eventually!)
Thanks again to @Corola for the figures (and blaming him/her if they're wrong, of course!), the chart below compares the performance of my pension account in the 15 years 2011 to 2025 with that of an ETF invested 40% in equities, 60% in bonds, assuming the ETF incurs the same platform fee (0.5% plus VAT to end 2024, 0.4% thereafter):

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The average return on my pension fund for the 15 years to end 2025 was 10.8% a year, which is almost identical to the average for an ETF invested 100% in equities (10.7% a year - see #572 above). The average return over the same period for an ETF invested 40% in equities, 60% in bonds, which I assume is closer to a 'typical' retiree's asset mix, was 4.5% a year.
The bad news for a fund following the so-called "safer" investment strategy is that they didn't get much consolation in the form of lower volatility. The worst yearly (Jan to Dec) return on my ETF was -15.3% (in 2018). The worst on an ETF invested 60% in bonds, 40% in equities wasn't much better: -14.1% (in 2022). The poor 2022 result was presumably due to the sharp rise in interest rates post-Covid. As the 'experts' keep telling us, prices move inversely with yields, therefore bond prices tanked.
 
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