# Best Performing Irish Pension



## AJAM (24 Mar 2022)

Not sure how accurate it is, but Ocean have published and ranked Irish Pension providers.









						Best Irish Pensions Fund Manager? Well, Go Compare...
					

Managed pension funds increase in 2021. But which fund managers are providing the best returns over different time periods? Interactive graph over 20 years




					ocean.ie
				




Zurich, Merrion and Aberdeen (according to the Ocean data) are consistently the best performing.
While, Aviva, New Ireland and Irish Life seem to be consistently under performing.


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## DBL2018 (25 Mar 2022)

And just shows why people should focus more on investment performance than charges, Zürich prisma 5 fund returned over 5% in 2021 compared to Irish life MAP 5, and Zürich performance 2% p.a. More over 20 years than Irish life managed fund.


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## Brendan Burgess (25 Mar 2022)

DBL2018 said:


> just shows why people should focus more on investment performance than charges,



It shows nothing of the sort.

Ignore past performance.  It is simply no guide to the future.

Look at charges only. 

Brendan


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## aristotle (25 Mar 2022)

There is importance in this comparison, this is about comparing investment managers really. Some are just better than others.


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## Brendan Burgess (25 Mar 2022)

aristotle said:


> Some are just better than others.



Yes, and after about 20 years you will be able to tell which one did better in the last twenty years.

It still will not tell you which one will do better over the next twenty years.

Brendan


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## aristotle (25 Mar 2022)

No one knows the future but the past gives some indication when tying to pick something.

If there is a well run company that has been consistently performing better than its competitors for 20 years, would you simple ignore that?

Advice to pick the lowest fees makes sense if you for example want to find an ETF to invest in the S&P 500 or something. But in this case you are picking a group of investment managers really and they are not all the same.


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## Cervelo (26 Mar 2022)

I've always felt that when starting on the pension journey you should be more concerned by the past performance rather than the fees going forward, and if somebody was to ask me who to start a pension with I'd automatically suggest Zurich
But when you've started your pension and are comfortable with the level of investment needed and have built up a bit of a fund that that is the time to really start looking at the fee structure


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## Brendan Burgess (26 Mar 2022)

aristotle said:


> If there is a well run company that has been consistently performing better than its competitors for 20 years, would you simple ignore that?



Absolutely.  All the data suggest that investment managers do not consistently outperform. In fact, because of high charges, they underperform the market.

The right strategy is to buy an index tracker with low charges. 

Brendan


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## Sarenco (26 Mar 2022)

The funds in this “report” have different asset mixes - it’s comparing apples and oranges.  If it was comparing the performance of funds with the same investment mandate (eg global equities), it might have some validity.

In any event, past performance is not predictive of future performance.  That is particularly true of active fund managers.


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## Slim (26 Mar 2022)

Where can one access the year on year performance of a particular fund, Prisma 5 for example?


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## aristotle (26 Mar 2022)

Brendan Burgess said:


> Absolutely.  All the data suggest that investment managers do not consistently outperform. In fact, because of high charges, they underperform the market.
> 
> The right strategy is to buy an index tracker with low charges.
> 
> Brendan


Yes but the question about the OPs report relates to the performance of pension providers. It’s not about their performance versus the market, it’s about their performance compared to each other.


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## Brendan Burgess (26 Mar 2022)

I had a quick look and they don't seem to compare them with index tracking funds. 

That should be the real comparison.

Brendan


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## Ndiddy (28 Mar 2022)

yes, if they compared indexes, maybe the consumer can see tracking error and wastage in fee structure....


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## Redzer (28 Mar 2022)

Sorry for what may be a silly question but is it practical to change existing pension funds in light of relatively high fees or poor performance?
I have 2 Irish Life bonds, 1 Irish Life PRSA, 1 Zurich PRSA and an ongoing DC AON pension. I'm 53 and hope to retire in 10 years.
Should I move any/all of these to an index tracker with low charges or is such an option only available when starting a pension/PRSA/Bond?


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## bankrupt (28 Mar 2022)

Brendan Burgess said:


> I had a quick look and they don't seem to compare them with index tracking funds.
> That should be the real comparison.


Is there any reason that it would be a bad idea to mandate that all pension providers have to provide this comparison with their usual historical performance data?  It's the only really important metric when considering such a long term investment and would clearly illustrate how bad pension products generally are.  It seems to me that the regulation of pensions in Ireland is almost akin to a scandal, with many people not sure what they have, what they are being charged and what they are losing over their lifetime as a result of high charges.   It's too easy to just accept that the pension providers are acting in our best interests and I think most people are not equipped to question what they are told (I know that I certainly was not at the beginning of my career).


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## T McGibney (28 Mar 2022)

bankrupt said:


> Is there any reason that it would be a bad idea to mandate that all pension providers have to provide this comparison with their usual historical performance data?


Because such comparisons are easy to game, and people are already scared enough of pensions as it is without overloading them with even more barely-relevant data? Also index-tracking encourages and rewards groupthink.




bankrupt said:


> It's the only really important metric when considering such a long term investment and* would clearly illustrate how bad pension products generally are.*  It seems to me that the regulation of pensions in Ireland is almost *akin to a scandal*, with many people not sure what they have, what they are being charged and what they are losing over their lifetime as a result of high charges.   It's* too easy to just accept that the pension providers are acting in our best interests* and I think most people are not equipped to question what they are told (I know that I certainly was not at the beginning of my career).



 I don't buy your doom and gloom about pensions. My own experience in relation to pension investment has been very, very positive overall. It doesn't bother me in the slightest if the chap next door has a slightly better pension outcome than mine, any more than if his car turns out a better option than mine. You pays your money and you takes your choices.


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## bankrupt (28 Mar 2022)

T McGibney said:


> Because such comparisons are easy to game, and people are already scared enough of pensions as it is without overloading them with even more barely-relevant data? Also index-tracking encourages and rewards groupthink.


You do make a valid point about not wanting to scare people away from pensions, it is imperative that people are encouraged to save for retirement.  However, I think it would be possible to construct a regulation for such a comparison that is not so easy to game and of course it can always be revised if that is what ultimately happens.  I'm not sure that I understand your point about group-think, if the group-think is actually correct then why is that a problem?  Studies have shown time and again that index tracking beats actively managed funds over time.


T McGibney said:


> I don't buy your doom and gloom about pensions. My own experience in relation to pension investment has been very, very positive overall. It doesn't bother me in the slightest if the chap next door has a slightly better pension outcome than mine, any more than if his car turns out a better option than mine. You pays your money and you takes your choices.


I didn't mean to imply that pensions are a problem, indeed they are essential for all of us.  How my pension performs relative to my neighbour is immaterial to me but the costs of what seems like a very small % charge over the course of a lifetimes' pension contributions are very much relevant to each of us and generally speaking involve very significant amounts of money lost (when compared to passive index tracking).


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## Dave Vanian (28 Mar 2022)

bankrupt said:


> Studies have shown time and again that index tracking beats actively managed funds over time.



This needs to be clarified.  Index-tracking beats *the average *actively-managed fund investing in similar asset classes over time.  Some active fund managers will beat the index.  The difficulty is that it's impossible to definitively predict in advance which actively managed funds will be the ones that beat the index-trackers.


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## Ndiddy (29 Mar 2022)

Dave Vanian said:


> This needs to be clarified.  Index-tracking beats *the average *actively-managed fund investing in similar asset classes over time.  Some active fund managers will beat the index.  The difficulty is that it's impossible to definitively predict in advance which actively managed funds will be the ones that beat the index-trackers.


And can continue to beat the index over the long term.


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## T McGibney (29 Mar 2022)

bankrupt said:


> However, I think it would be possible to construct a regulation for such a comparison that is not so easy to game and of course it can always be revised if that is what ultimately happens.



Everything is possible in theory, but in the real world, most regulation ends up being gamed by someone and governmental inertia usually causes poor and ineffective regulations to remain on the statute books long past their sell-by dates.



bankrupt said:


> I'm not sure that I understand your point about group-think, if the group-think is actually correct then why is that a problem?  Studies have shown time and again that index tracking beats actively managed funds over time.


I'd argue that groupthink, meaning adherence to a perceived group consensus as a substitute for gut feeling, instinct and common sense, is rarely if ever a positive phenomenon, especially in investing. If a punter wants to invest in a consensus or index tracking fund, good for them, but I don't want to leave my pension at the mercy of people who park their common sense at their office front door.


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## bankrupt (29 Mar 2022)

T McGibney said:


> Everything is possible in theory, but in the real world, most regulation ends up being gamed by someone and governmental inertia usually causes poor and ineffective regulations to remain on the statute books long past their sell-by dates.


That's a defeatist view, although we all like to complain about ineffective regulations on occasion, the fact remains that regulation can be effective (yes, even in the "real world").  If we agree that pension providers should ideally be forced to show how they perform vs. passive index tracking then it's not so hard to imagine that it would be possible to mandate this.



T McGibney said:


> I'd argue that groupthink, meaning adherence to a perceived group consensus as a substitute for gut feeling, instinct and common sense, is rarely if ever a positive phenomenon, especially in investing. If a punter wants to invest in a consensus or index tracking fund, good for them, but I don't want to leave my pension at the mercy of people who park their common sense at their office front door.


I agree with you that blindly following any idea without some level of analysis or skepticism should be avoided.  In this particular case there is hard evidence that index tracking generally beats active management over the long term (some out-performers notwithstanding).  As someone  pointed out above it's effectively impossible for us to choose these out-performers so for the rest of us the logical choice is low-cost index tracking.  This is the exact opposite of parking common sense at the front door.  

Pension companies should be free to offer higher cost products to those who believe they can do better than the index but ordinary citizens should be guided towards the right product which over the course of a lifetime will be a low-cost passive index-tracker.  I don't think this guidance happens at the moment for reasons that presumably have something to do with the high fees that funds are able to charge despite poor performance (in general).


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## T McGibney (29 Mar 2022)

bankrupt said:


> That's a defeatist view, although we all like to complain about ineffective regulations on occasion, the fact remains that regulation can be effective (yes, even in the "real world").


Defeatist to you, realist to me.


bankrupt said:


> If we agree that pension providers should ideally be forced to show how they perform vs. passive index tracking then it's not so hard to imagine that it would be possible to mandate this.



We don't agree though, and while many things are possible not all are desirable, especially when it comes to red tape.


bankrupt said:


> I agree with you that blindly following any idea without some level of analysis or skepticism should be avoided.  In this particular case there is hard evidence that index tracking generally beats active management over the long term (some out-performers notwithstanding).  As someone  pointed out above it's effectively impossible for us to choose these out-performers so for the rest of us the logical choice is low-cost index tracking.  This is the exact opposite of parking common sense at the front door.
> 
> Pension companies should be free to offer higher cost products to those who believe they can do better than the index but ordinary citizens should be guided towards the right product which over the course of a lifetime will be a low-cost passive index-tracker.  I don't think this guidance happens at the moment for reasons that presumably have something to do with the high fees that funds are able to charge despite poor performance (in general).


You're conflating high charges, active management and below-par performance. Again, I don't buy your doom and gloom, but we're probably starting to go round in circles.


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## Sarenco (29 Mar 2022)

bankrupt said:


> Is there any reason that it would be a bad idea to mandate that all pension providers have to provide this comparison with their usual historical performance data?


What do you mean by "their usual historical performance data"?


bankrupt said:


> If we agree that pension providers should ideally be forced to show how they perform vs. passive index tracking then it's not so hard to imagine that it would be possible to mandate this


What index do you have in mind? 

Take Zurich's performance fund.  It has an indicative (but not fixed) equity range of 65%-90%, with the balance in bonds and cash.  How do you compare that to an index?

A more practical suggestion would be for the Central Bank to insist on life companies producing an ongoing charges figures for their unit-linked funds, with an assumed AMC.


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## bankrupt (29 Mar 2022)

T McGibney said:


> You're conflating high charges, active management and below-par performance.


Well yes of course I am! that's entirely the point!  Actively managed funds with high charges (relative to passive funds) have below-par performance!  This is a matter of record and research.



T McGibney said:


> Again, I don't buy your doom and gloom, but we're probably starting to go round in circles.


It's not "doom and gloom" to suggest that pension funds are charging too much for below par performance.  Of course it's better that people invest in a slightly worse performing option than not at all but it's not right that they lose out through no fault of their own.


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## bankrupt (29 Mar 2022)

Sarenco said:


> What do you mean by "their usual historical performance data"?
> 
> What index do you have in mind?
> 
> ...


By "usual performance data" I mean the fund reports that we are all used to seeing - usually showing how great they are without reference to any benchmark.

I think it's fair to say that most use the S&P500 as the reference point but I'm sure there are other options and combinations of world indexes as well.  

Your point is interesting about how you would compare a mixed fund but perhaps it's not so hard?  You could compare the equity portion against an equity index (e.g. SPX) and the bond portion perhaps against 10Y treasuries? If I were to design a regulation that required comparison then maybe I would force the reference to be always against the volatile equity component of the fund which is really where the average investor stands to lose most over time.

The more general point is that as a completely average investor I can expect to beat most active funds (and the research bears this out). 

I don't really understand your last point, could you elaborate?   Particularly an "assumed AMC"?


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## Sarenco (29 Mar 2022)

bankrupt said:


> You could compare the equity portion against an equity index (e.g. SPX) and the bond portion perhaps against 10Y treasuries?


Ok, leaving aside the most appropriate index to use for the equity and fixed-income elements of the portfolio, what split do you use between these asset classes in your benchmark?  Bear in mind that these funds do not have a fixed split between asset classes - they change all the time.


bankrupt said:


> The more general point is that as a completely average investor I can expect to beat most active funds (and the research bears this out).


Well, all the major pension providers (Zurich, Aviva, etc) now offer index funds so what's the problem?


bankrupt said:


> I don't really understand your last point, could you elaborate? Particularly an "assumed AMC"?


Pension providers offer contracts with different AMCs so you would have to use a standardised AMC (say, at 0.75%) so that providers could publish an ongoing charges figure (which includes costs over and above the AMC) that can be compared across funds.


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## bankrupt (29 Mar 2022)

Sarenco said:


> Ok, leaving aside the most appropriate index to use for the equity and fixed-income elements of the portfolio, what split do you use between these asset classes in your benchmark?  Bear in mind that these funds do not have a fixed split between asset classes - they change all the time.


I don't think it's so complicated as you imagine - you simply have 2 potential investment vehicles and put the same amounts in at the beginning with regular investments thereafter and compare the end result.  You could do the same whether it's monkeys throwing darts, bonds, tulip bulbs or crypto and come to the same conclusions.

EDIT to clarify:  the point about mixing asset classes is important and I think I glossed over it.  Someone who has index tracking as part of their portfolio should normally also hold other assets like bonds, gold, tulips etc. in a proportion relative to their own circumstances (age, risk etc).  



Sarenco said:


> Well, all the major pension providers (Zurich, Aviva, etc) now offer index funds so what's the problem?


The problem is that Zurich wants you to buy their relatively expensive actively managed product.  If I know no better I will probably choose this instead of a boring passive tracker thinking the experts know best.  If enough people choose passive trackers (as seems to be happening in the US thanks to Vanguard) then there is pressure on the charges also.



Sarenco said:


> Pension providers offer contracts with different AMCs so you would have to use a standardised AMC (say, at 0.75%) so that providers could publish an ongoing charges figure (which includes costs over and above the AMC) that can be compared across funds.


But why choose a standardised AMC?  surely the providers should be incentivised to minimise this?  It seems perverse to try to fix it.


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## Sarenco (29 Mar 2022)

bankrupt said:


> I don't think it's so complicated as you imagine - you simply have 2 potential investment vehicles and put the same amounts in at the beginning with regular investments thereafter and compare the end result


You're missing the point - the allocations in the mixed fund are not fixed; they change all the time. 

You simply cannot compare a dynamic allocation to different asset classes with an index or a blend of indices.  It's simply not possible


bankrupt said:


> The problem is that Zurich wants you to buy their relatively expensive actively managed product.


Why is that a problem if they also offer passively managed products?  It's up to consumer to decide where they want to invest their money.


bankrupt said:


> It seems perverse to try to fix it.


I'm not trying to fix it. 

I'm saying that providers should be required to disclose an OCF for each fund based on a consistent AMC. 

Again, providers offer contracts with a whole range of different AMCs, commissions, etc.  Unless you chose a single, representative AMC across all providers you simply cannot compare the cost of their products.


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## bankrupt (29 Mar 2022)

Sarenco said:


> You're missing the point - the allocations in the mixed fund are not fixed; they change all the time.
> 
> You simply cannot compare a dynamic allocation to different asset classes with an index or a blend of indices.  It's simply not possible


I suppose it may be a little complicated to compare performance for a mixed fund instantaneously but in the longer term it's actually straightforward - simply look at the inputs and the outputs.  I absolutely disagree that it's not possible to compare the performance of one portfolio to another and we should not allow ourselves to be confused by the complexities of the financial industry when we look at the long term returns of any asset class. 



Sarenco said:


> Why is that a problem if they also offer passively managed products?  It's up to consumer to decide where they want to invest their money.


The problem is that people do not understand this properly and the financial industry takes advantage of this lack of understanding.  As we are not talking about some niche aspect of society but rather something that is fundamental to us all it is important that the industry acts in the best interests of society as a whole.




Sarenco said:


> I'm not trying to fix it.
> 
> I'm saying that providers should be required to disclose an OCF for each fund based on a consistent AMC.
> 
> Again, providers offer contracts with a whole range of different AMCs, commissions, etc.  Unless you chose a single, representative AMC across all providers you simply cannot compare the cost of their products.



Sorry but I disagree, you can always compare the performance of one financial instrument against another regardless of the internal complexities. Over the long term it's simply a case of money in vs. money out.


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## Dave Vanian (29 Mar 2022)

Aside from specific asset selection, an active fund manager will also vary the asset split of the fund from time time.  So today it might be 70% equities, 10% property, 10% bonds and 10% cash.  Tomorrow it might be 65% equities, 15% bonds and so on.  That's part of active management.  

While I'm all in favour of more accountability and transparency in the Irish funds industry, how would you propose that you would compare such a fund against an index-tracking equivalent?


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## bankrupt (29 Mar 2022)

Dave Vanian said:


> Aside from specific asset selection, an active fund manager will also vary the asset split of the fund from time time.  So today it might be 70% equities, 10% property, 10% bonds and 10% cash.  Tomorrow it might be 65% equities, 15% bonds and so on.  That's part of active management.
> 
> While I'm all in favour of more accountability and transparency in the Irish funds industry, how would you propose that you would compare such a fund against an index-tracking equivalent?


Would there be any need to do anything more complicated than to compare such a fund's return against an index tracker over a long period?


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## Sarenco (29 Mar 2022)

bankrupt said:


> I suppose it may be a little complicated to compare performance for a mixed fund instantaneously but in the longer term it's actually straightforward


No, it’s not straightforward to compare a dynamically allocated, mixed-asset, actively managed fund with an index or blend of indices.  It’s simply impossible.

I’ve tried to explain why that is the case but you clearly don’t understand what financial indices benchmark.


bankrupt said:


> The problem is that people do not understand this properly and the financial industry takes advantage of this lack of understanding.


Index funds have been widely available since the 1980’s - they are hardly a secret.



bankrupt said:


> Sorry but I disagree, you can always compare the performance of one financial instrument against another regardless of the internal complexities.


You’re not really disagreeing with me - you are simply demonstrating your lack of understanding of the pricing structures of life assurance contracts.  I am simply looking for transparency.


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## bankrupt (30 Mar 2022)

Sarenco said:


> it’s not straightforward to compare a dynamically allocated, mixed-asset, actively managed fund with an index or blend of indices. It’s simply impossible.


OK fair enough, let's assume that it's impossible as you say, then how should we evaluate the performance of such a fund?  Against what benchmark?


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## Dave Vanian (30 Mar 2022)

bankrupt said:


> Would there be any need to do anything more complicated than to compare such a fund's return against an index tracker over a long period?



What index tracker would you compare it to?  

Any such comparison would need to be comparing the actively-managed fund to something with a similar asset mix / risk profile.  Otherwise it's comparing apples with oranges and is useless.


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## bankrupt (30 Mar 2022)

Dave Vanian said:


> Any such comparison would need to be comparing the actively-managed fund to something with a similar asset mix / risk profile. Otherwise it's comparing apples with oranges and is useless.


Then I must ask the same question to you as I asked Sarenco, how can we measure the performance of such a fund?   What is a suitable benchmark?


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## Sarenco (30 Mar 2022)

bankrupt said:


> What is a suitable benchmark?


There isn't one - that's the point.


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## Dave Vanian (30 Mar 2022)

bankrupt said:


> Then I must ask the same question to you as I asked Sarenco, how can we measure the performance of such a fund?   What is a suitable benchmark?



There is already a risk scale that is used in the pensions industry.  It groups funds into risk categories from 1 to 7, with 1 being the least risky and 7 being the most risky.  The scale is far from perfect in that it uses volatility as a proxy for risk, when risk is far more multi-faceted than that.  But it's better than the old "Low / Medium / High" choice I suppose. 

You can compare all funds available in Ireland that fall into the same risk category.  You'll still end up comparing apples with oranges as two different Risk 5 funds may be entirely different in their composition.  There just isn't a benchmark as funds are not all investing in the same assets. 

In any event, all that such tables will do is show you past performance.


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## bankrupt (30 Mar 2022)

Sarenco said:


> There isn't one - that's the point.


I don't want to misunderstand your point here (genuinely, I want to be sure I understand what you are saying correctly) - do you mean to say that it is not possible to make an objective comparison between some types of multi-asset pension funds and another (perhaps simpler) investment vehicle?  That for example it is not possible to look at a period of 20 years of regular investment and say which of several investment vehicles offered a better return taking all costs into account?  I am sure I am missing your point here and would appreciate more of an explanation.

DaveV also makes the point about not being able to compare different funds but I have the same question - when we consider a long term investment why is it not possible make a comparison?  Simply because of the risk classification?  Surely we can also assign a similar risk classification to any asset class and compare the returns when taking into account all costs?  



Dave Vanian said:


> In any event, all that such tables will do is show you past performance.



It would certainly be nice to have one that predicted future performance but I don't expect that


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## Dave Vanian (30 Mar 2022)

bankrupt said:


> Surely we can also assign a similar risk classification to any asset class and compare the returns when taking into account all costs?



This is the difficulty.  Risk classification is not nearly as tangible as measuring costs.  As I've said, the current standard method uses volatility as a proxy for risk, even though volatility and risk are not the same thing. 

To give an example, if a fund manager decided to invest the entire fund in a single share, most of us would agree that would be an extremely high-risk fund.  If that share (and therefore the fund) went slowly but steadily up in value over a period of years, the current system for assigning risk from 1 to 7 would give it a low number because the volatility is low.  Benchmarking such a fund against another fund with a similar risk rating, e.g. a bond fund would be simply wrong.     

And how would you benchmark a fund (like the majority of multi-asset managed funds) that have shifting mix of asset classes within the fund?


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## Ndiddy (31 Mar 2022)

Wouldn't a comparison to a major market indices just show how well or not a fund did against the market norm?  No matter the fund asset allocation, active or passive, comparing to acknowledged market like MSCI would show if that particular funds strategy worked over the long term?


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## bankrupt (31 Mar 2022)

Dave Vanian said:


> And how would you benchmark a fund (like the majority of multi-asset managed funds) that have shifting mix of asset classes within the fund?


Why not just compare the fund's return to the SP500 or the MSCI world index or the Wilshire 5000 or even a range of indices?  The fact that there is a mix of asset classes within the fund does not preclude the comparison with an index - at the end it's an investment vehicle and I want to have some idea of how my investment is performing vs. a base investment option. The comparison could have some explanation to explain under-performance (e.g. a low-risk fund that is weighted towards bonds/cash to avoid volatility will naturally not achieve the same return as an all-equity fund in buoyant markets but should protect capital in a down-turn).  From my perspective I would like to see that the fund is doing what it purports to do - i.e. if I am very risk-averse it has grown slowly over time and protected my investment even when the index has dropped or on the other end of the risk scale that I am consistently doing better than the index (do let me know if you see one of those   )


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## Sarenco (31 Mar 2022)

bankrupt said:


> Why not just compare the fund's return to the SP500 or the MSCI world index or the Wilshire 5000 or even a range of indices?


You can compare the fund's performance with whatever you want; the major index providers all publish performance figures.

You don't need any regulatory changes to do this.


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## Dave Vanian (31 Mar 2022)

@Ndiddy & @bankrupt

I can easily chart the past performance of any Irish Managed Fund against an index like MSCI World.  A typical Managed Fund contains equities, bonds, property, cash and perhaps some alternatives.  The MSCI World is an index containing equities only. 

During years when the MSCI dropped because global equity values dropped, my typical Managed Fund dropped by less because of the diversifying assets.  During years when global equities rose in value, my typical Managed Fund rose by less for the same reason.  That's as it should be. 

I can quantify the extent by which diversifying assets protected investors against equity market falls and diluted equity market gains.  So what?  Why is that useful?  An index of just equities and a fund containing many different asset types will always perform differently so what's the benefit of comparing them?  Apples and oranges.  I can add a comparison with the value of my house over the same period.  It performed differently to both the Managed Fund and the MSCI World Index.  While it might be an interesting comparison, it wouldn't tell me much of real use as again it's a different asset type.  

Such a comparison (with an equity index) would only be of value if your own personal risk appetite has you investing in an all-equity global fund.  Then the comparison with an all-equity global index like the MSCI World would be valid and useful.


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## bankrupt (31 Mar 2022)

Do we have some level of consensus perhaps?  Comparing a mixed-asset fund to an Index is possible but you have to do it yourself and it may also require some additional interpretation to account for the risk protections intended to be part of a well managed active fund.

If you recall where this thread started, Brendan said:



> I had a quick look and they don't seem to compare them with index tracking funds.
> That should be the real comparison.


 
That comment was the reason for my question as to whether there was merit in mandating that funds publish this comparison as I still believe it is a reasonable way to have an idea of the performance of an investment.  

There is a plethora of research on whether or not actively managed funds manage to out-perform the index in general and we all know what that research says.  I am quite sure that Irish funds have no desire to publish a comparison of their active-fund performance and I doubt that reluctance has much to do with the complexity of explaining risk.


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## Dave Vanian (31 Mar 2022)

bankrupt said:


> There is a plethora of research on whether or not actively managed funds manage to out-perform the index in general and we all know what that research says.



We seem to be back to this vague concept of The Index as if there is only one.  There are as many indices out there as there are markets.  If you think that there is value in comparing a fund that invests in a mixture of assets with an index comprising, say, global equities only, then the information is already out there in the public domain.  Comparing the performance of two different asset classes is of little value.  Why not compare a multi-asset fund with the performance of the spot gold price?  Apples and oranges. 

As I said before, studies have shown that *the average* actively-managed fund will underperform an index, if the fund is being compared to an appropriate index of the same asset class.  Like any average, some actively-managed funds will outperform the appropriate index, but it's not possible to definitively predict in advance which actively-managed funds will be the ones to outperform.    



bankrupt said:


> I am quite sure that Irish funds have no desire to publish a comparison of their active-fund performance and I doubt that reluctance has much to do with the complexity of explaining risk.



Past performance of any of the Irish fund managers' funds is readily available on their respective websites.  Understandably, they don't compare their multi-asset funds with indices of different assets as that wouldn't be a valid comparison.  But if you want to run your own comparison with any index of any asset class you like, all the data to do so is readily available online.


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## Sarenco (31 Mar 2022)

bankrupt said:


> Comparing a mixed-asset fund to an Index is possible


It's possible but meaningless.

Would you compare the performance of an active bond fund with an equity index?  Of course you wouldn't - you would be comparing apples and oranges.

And yet you want to compare the performance of a dynamic, multi-asset fund with the performance of an equity index chosen at random. Surely you can see why that would not be an appropriate comparison?

Why not simply invest in an index fund (or a basket of index funds)?  Then you can then appropriately compare the performance of the fund with the index it is purporting to track.


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## bankrupt (31 Mar 2022)

Dave Vanian said:


> We seem to be back to this vague concept of The Index as if there is only one.


This is a fair point and Sarenco makes much the same "Would you compare the performance of an active bond fund with an equity index?" 

Rather than only imagining cases where there is a huge divergence in the types of asset being compared, how about funds being required to show a performance comparison vs. a relevant index (or range of indices - no need for it to just be one)?  It should not be difficult to define a set of indices that could be selected from for this purpose.    



Sarenco said:


> Why not simply invest in an index fund (or a basket of index funds)? Then you can then appropriately compare the performance of the fund with the index it is purporting to track.


Yes indeed, I would hope that people would eventually do that by default, however for some unknown reason expensive actively managed funds stubbornly survive.  I can only assume that is because there is not a general awareness of the merits of active-management vs. passive index tracking - hence my question about how we might highlight the difference.


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