Irish Life - Technology QLD January Returns

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Hi,

I just logged on to my Irish Life (Quinn Life) account and see that last months returns for the Technology OLD was -1.32%.

The Nasdaq was up approx 12 % in January.

Am going to ring Irish Life to enquire but just thought id post here first to see if I am missing something obvious ??

If anybody can explain the difference to me, please do.

Thanks
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Euro/$ rate changed from 1.32 to 1.37 (+5%) from 1/1/2013 to 31/01/2013.

Does that explain it?
 
Hi JPD,

Thanks for your reply.

Even at that it should still be up around 7%.
I'm just confused that there is such a difference between approx -1 % to + 12 %

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There have been a few posts here on AAM in the past about QL funds appearing to make unexplained deviations from the indices which they track.

I had a look at this tonight and based on the data I can get a hold of, there does seem to have been an issue.

It will be interesting to see if IL do a better job.
 
I’d guess that the fund isn’t tracking NASDAQ. Though I’ve no idea what it’s supposed to be doing, is there any information sheet on Quinn/Irish Life about it?

NASDAQ keeps reweighting large companies, so that they don’t have too much significance on the NASDAQ. They don’t want stock movements in one company having too large an effect on the index. A fund could be much simpler and might own something like the 10 largest companies on the NASDAQ.

Apple was down around 20% in January and is a large component of many Irish funds so I’d guess that and the weaker dollar is responsible for the sub NASDAQ returns. (I realize discussion about stocks aren't allowed - but this comment hopefully falls within the guidelines.)
 
ashambles said:
I’d guess that the fund isn’t tracking NASDAQ. Though I’ve no idea what it’s supposed to be doing, is there any information sheet on Quinn/Irish Life about it?)
Click to expand...

You should have received in June 2012 a document from QL titled ‘Policyholder circular with respect to a scheme for the transfer of part of the life assurance business of QL to IL”. It was marked “This is an important document”. The document provided details of the IL funds into which the QL funds would be transferred.



On the IL Nasdaq fund the document states the IL fund “aims to to match the average returns of all the shares that make up the Nasdaq 100 index”. This, to me, isn’t index tracking.
 
I just did a quick check on the QL Euro fund. I plotted the QL values (which I had to take manually from the My Online graphs) against the Eurostoxx 50 value for the same dates. I just did this for 17 dates from early 2008 to end of 2012 (c 4 month intervals).

As the QL fund value is not the same as the EuroStoxx 50 value, I normalised the QL value to be equal to the Eurostoxx 50 at the start of the graph.

See the results here.

[broken link removed]

It seems that QL have outperformed the index by c. 15% over the period which is mainly a falling market. I wonder if this could be due to some of the fund being held in cash and that in a rising market there would be a corresponding under-performance.

It's a bit frustrating that we have to 2nd guess all this rather than IL just being clear about what the funds are in.

To be fair to IL, the fund and the index seem to be quite closely aligned since IL took over QL. Maybe they have changed strategy?

Personally, I do not like the lack of openness and I am considered a self directed PRSA with ETF's.
 
The outperformance against the Eurostoxx 50 could be due to dividend reinvestment within the fund. An annual dividend of around 2.5% reinvested could explain the increase against the index over the period.
 
3CC said:
I just did a quick check on the QL Euro fund.
To be fair to IL, the fund and the index seem to be quite closely aligned since IL took over QL. Maybe they have changed strategy?
Click to expand...

This was a bit of a waste as the IL fund to which the QL Eurostoxx50 was transferred doesn’t track the Eurostoxx50 index. The aim of the IL Euro fund is to track the average of all returns that make up the FTSE Europe ex-UK index. This gives rise to various problems. For the investor it’s not exactly transparent as you don’t know from when the returns are calculated, e.g. is it from the date the QL fund was transferred or is it from the date the index was last revised / set-up/ etc. (although I’m certain IL will tell you if you ask). This makes performance monitoring difficult if not impossible. Also this index while Europe ex-UK is not a eurozone index. The top 10% of the holdings currently are Swiss (and there are other European but non-eurozone equities in the index) so you are now exposed to exchange rate risk to which you were not exposed with the QL fund. It also means you have a greater allocation to non-euro denominated equities than you previously had with the QL fund.


From what I can see, the IL Biotech, Latin America, Emerging Markets, China and Clean Energy are index tracking funds (i.e. they aim to track the performance of an index). The others "aim to match the average return of all the shares that make up" the index in question.
 
Hi Eeyore. I have redone the graph against the EuroStoxx50 total return and it looks like this

[broken link removed]

This is looks better with the QL fund slowly slipping below the EuroStoxx 50 total index which you would expect due to the AMC.

However, the 1% AMC compounded over the 5 year period in the chart should be ~5.1%. The actual error that I see is 8.36%. (I can supply the numbers I am using if anyone wants them.)

This implies an actual AMC of 1.73% which is a lot less attractive. Note that the time period I am looking at is when the fund was with QL and therefore the EuroStoxx 50 Total is the appropriate index to compare against. I do not think there has been enough time since IL took over the fund to do the same exercise reliably.

I am inclined to think that the AMC quoted for these funds is only part of the story.
 
Not to ride over this thread, but why do people invest in funds like these which have exorbitant Management Charges which are only part of the story. The real story is the TER (Total Expense Ratio) which Irish funds are not obliged to give to investors.

In any case existing Investors should have a look at ETFs (Exchange traded funds) which are less penal on Investors concerning costs, but are completely transparent in relation to costs.

Over a five to ten year period, Management charges eat up a large chunk of profits in any fund.

I am not a broker, but after going through the proverbial, hate to see others getting ripped off.
 
Hi Mercman,

I agree. I think many people went with QL 5-10 years ago when ETF's were not as well known.

Personally, I am looking at transferring my old Quinn Life pension with Irish Life to a self directed PRSA. Ironically, Irish Life might be the best choice for this, although they have yet to call me back to confirm charges/details etc.
 
3CC, for what it's worth I moved mine to Friends First who are very cost effective. I have no ties with them and only went to them because they were recommended to me. To be honest, it any institution haven't got the manners to call you back, take your business elsewhere. IMO
 
Hi Folks,
Thanks for all the replies, im waiting on IL to get beck to me but it looks like im stuck in this fund (funds) for the time being.
I had originally invested 65000 approx 7 years ago and am currently at approx 57000 so need to sit and wait untill it gets back to 65000 and then I will be taking it out and buying ETF's instead.
When IL come back to me I will let you know what they say.
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Hi Scanner,

I know there is a strong instinct to hold on with IL but the only reason to hold on until the fund reaches the value to put in originally is psychological.

If you transfer to different pension with lower charges and invest in the same underlying indices as your are are present, you will get back to your staring point more quickly. IMHO.

3CC
 
Hi 3CC
Thanks for your comments.
Its not a pension as such, its an investment I made
With spare cash.
The problem I have now is if I take it out and reinvest I will be
taxed on the profit I make up to 65000, where if I leave it as
is I won't pay tax untill I go over 65,000.
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That's true. Probably makes sense to cash out when you break even.

How long do you have the fund?
 
I have it over 7 years now. I was down to around 38,000 at one stage
but it has made a recovery. I was glad to be honest when they
move it from QL, I was fearful I'd wake up one morning and
it would all be gone with what was going on with Quinn, but I can't
help feeling I don't have what I thought I was investing in now :-(
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Hi,
Irish Life came back to me with this reply

"In relation to your query the Quinn Life Technology fund uses the Nasdaq index as a benchmark however the value of the fund is not directly affected by this.
The reason for this is that fund would be invested in different areas of the technology industry and because of this your value can rise or fall depending on market performance."

Which does not really answer my question why there was such a difference between -1.34% and +12% and confuses me when im told "your value can rise or fall depending on market performance"
Considering market performance was very good in January and im down -1.34% what would happen to the fund if the maklet was actually down.

I have replied back to Irish Life asking.....
" My understanding when I bought this fund was that it tracks the Nasdaq and now I am being told it does not. This is not good.
Even so, the difference between -1.32% & 12% needs an explanation.
I am sure you will agree that there's not much point in being in a fund if you dont know what your investing in.

Can you give me a breakdown of what the fund was invested in in January please"

I will let you know their response.
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I have also contacted Irish Life to ask them what their tracking error is. I accept that some of their funds are not pure trackers but for the ones that are, I would expect a reasonable tracking error.

Irish Life do not seem to be adding any value to the process. Scanner, would you be interested in selling out of your IL investments and give the money to me. I'll charge you 1% and then invest it in an ETF tracking the index of your choice. I'll even fill out your tax returns for you. You will get a fully transparent investment with a small tracking error and I will get about 0.5% margin every year.

Of course I am joking but it makes you wonder what you are paying for.
 
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