Performance Update for Colm Fagan's ARF
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Gordon Gekko
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They’re useful contributions, but you’re wasting your time for a suboptimal outcome. I agree with AJAM, you should move to a fund/ETF/managed portfolio.
Duke of Marmalade
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Can't quite remember why I chose a High Dividend fund. I suppose it is down to my three rules for choosing investments: Tax, Tax and you guessed it. High Dividend shares should stand at a small discount because in general they are subject to higher taxation and so that should be a free lunch in an ARF. Seems to have cost me about 10% in 2024
Tax is important but surely shouldn't be the main or only (never mind threefold) reason for choosing an investment option?
Colm Fagan
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What evidence do you have that I'm wasting my time for a suboptimal outcome? If you have, I'd like to see it. If not, it would be best to keep your views to yourself.
To the best of my knowledge, there's no evidence either way. I seem to be the only "real" investor who publishes their ARF returns (gross and net of charges). People are great at quoting returns on funds, but I've never seen evidence for how much of people's ARF's are actually invested in those funds and, more importantly, what charges they incur in total. I'd go so far as to say that the vast majority of investors (and advisers) don't have a clue what charges are being levied against their accounts, in the form of adviser fees, insurance company charges, asset manager fees, custodian fees, commissions on share sales & purchases, fixed fees for managing ARF accounts, etc. On the other hand, I know exactly what I'm being charged.
As to wasting my time, I did virtually nothing for 50 of the 52 weeks of 2024 and then only spent an hour or so on it at Christmas time.
I agree that my approach is not for everyone, but I enjoy following the fortunes of the companies in which my money is invested. I believe that the market is (normally) right, so it's pot luck as to which stocks will do well or badly. Therefore, the long-term return (before charges) on my portfolio will be broadly the same as on one that's professionally managed. However, the charges are much lower, so the net return should be higher.
I also believe that investing in real businesses gives me a better chance of identifying the rare occasion when the market is manifestly wrong and of profiting from it.
Gordon Gekko
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What evidence? The performance, the fees, the hubris around own goals such as Tesla and Novo Nordisk, and the time you waste thinking about it.
Colm Fagan
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So you're saying the reported performance and the fees are suboptimal? Show me why. That's what I asked the last time. I'm asking again.
As to my "hubris" about Tesla, it was exactly the opposite: I admitted to having been an idiot, not like some other people on this forum, who don't have a clue about compound interest (see posts #86 and 88 above) but won't admit it.
I also admitted to having gone against my advice to myself on Novo Nordisk. That's the opposite of hubris. Do you know the meaning of the word?
Why do you think you have to take stupid pot-shots at me - not just now, but going back through previous updates, on this thread and elsewhere? Do yourself a favour: give it up.
Duke of Marmalade
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Colm, you got off light. @Gordon Gekko called me and others intellectual merchant bankers in another thread.
Gordon Gekko
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The purpose of the forum is to support other people to acheive better financial outcomes. And to help people avoid financial mistakes.
I like Colm’s writing style and his contributions but his DIY approach to investing is foolhardy.
For an ARF of meaningful size, one can get the investment team in Zurich to manage it via their International Equity fund for 0.5% (no VAT), so cheaper than Colm’s DIY approach. Trading and other costs are tiny, so in totality well below Colm’s 0.6% plus VAT (or 0.5% plus VAT, whichever it is). The performance is better than Colm’s (unsurprisingly).
I commend Colm for his openness and honesty, but his approach is the wrong one.
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A Managed International Equity Fund
-3.5 , 12.23, 21.28, 18.5, 10.85, 10.37 (2016) 9.37, -6.08, 29.72, 14.72, 27.71 (2021), -19.9, 22.14, 28.37
A Global Index Tracker
-???, 14.05, 18.79, 19.25, 8.45, 14.14 (2016) 5.66, -4.21, 30.22, 3.87, 33.53 (2021). -13.0, 18.21, 26.0
All figures net of all costs - AMC, Other Ongoing Costs and Portfolio Transaction. Costs.
NB: The ??? means the tracker wasn't on the platform for all of 2011 so I don't have the exact figure that would include all costs.
-3.5 , 12.23, 21.28, 18.5, 10.85, 10.37 (2016) 9.37, -6.08, 29.72, 14.72, 27.71 (2021), -19.9, 22.14, 28.37
A Global Index Tracker
-???, 14.05, 18.79, 19.25, 8.45, 14.14 (2016) 5.66, -4.21, 30.22, 3.87, 33.53 (2021). -13.0, 18.21, 26.0
All figures net of all costs - AMC, Other Ongoing Costs and Portfolio Transaction. Costs.
NB: The ??? means the tracker wasn't on the platform for all of 2011 so I don't have the exact figure that would include all costs.
Gordon Gekko
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Just to make it easier to read...
| Year | Managed fund | Index tracker | Colm's ARF |
| 2011 | -3.5% | N/A | -2.90% |
| 2012 | 12.23% | 14.05% | 24.20% |
| 2013 | 21.28% | 18.79% | 22.40% |
| 2014 | 18.50% | 19.25% | 16.40% |
| 2015 | 10.85% | 8.45% | 13.30% |
| 2016 | 10.37% | 14.14% | -5.80% |
| 2017 | 9.37% | 5.66% | 27.50% |
| 2018 | -6.08% | -4.21% | -15.30% |
| 2019 | 29.72% | 30.22% | 45.30% |
| 2020 | 14.72% | 3.87% | 1.80% |
| 2021 | 27.71% | 33.53% | 16.10% |
| 2022 | -19.90% | -13.00% | -8.00% |
| 2023 | 22.14% | 18.21% | 18.50% |
| 2024 | 28.37% | 26.00% | 10.60% |
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Colm Fagan
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Thank you, @S class. That's how I feel too.
Thank you, too, @SPC100. It's also worth adding that my figures are real returns earned by a real investor. They are net of all fees, including (for 2024) my advisor's fee for helping me find a new ARF provider and for facilitating the handover.
I don't have a clue of the relevance of the figures quoted for unit-linked funds. Did even one ARF investor buy those funds and stay there for the duration? If they did, what additional fees did they incur, from their advisor or from the ARF provider? Those additional fees would have to be deducted from returns in order to compare like with like.
Finally, I'm not trying to make this into a competition. I'm just telling what I've done, why I've done it, and what were the results. Some readers enjoy hearing my story. Some obviously don't.
Colm Fagan
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Can you even do basic arithmetic? I wrote that total expenses for 2024 were €522 per €100,000 of fund value at the start of the year. For your information, that's less than 0.522% (I leave it as an exercise for the student to work out why it's less than 0.522%). Where in God's name did you get 0.6% plus VAT or 0.5% plus VAT? I'll also remind you that the 0.522% (sorry, less than 0.522%) includes the advisor's once-off fee for sourcing a new ARF provider and for facilitating the transfer (a job he did very well, I'm happy to say). It also includes the cost of all purchases and sales, including commission, trade processing fees, local market charges - and VAT (and the ARF provider's fee, of course)
I repeat my advice from earlier:
I’m going to call this out. Firstly, I and others evidently appreciate @Colm Fagan‘s contributions here and neither want nor need you policing it out of existence.
Secondly, you do realise what would happen if literally everybody took your advice and went passive? No price discovery therefore massive, massive investment risk. That’s the main problem with passive investment dogma - it only outperforms active while it’s less than a certain undefined proportion of the market.
In other words, you should be thanking @Colm Fagan rather than deriding his personal investment decisions.
Calling his openness “hubris” as if he’s doing all this for some sort of reputational benefit just sounds like sour grapes tbh.
Done.
Colm Fagan
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Thanks, @conor_mc .
Another reason for publishing is to expose the price gouging in this market.
My ARF provider does an excellent job. Nevertheless, I think they grossly overcharge for what is essentially basic bookkeeping and payroll. I believe the price should be a fraction of what I'm being charged; however, my pension adviser (who also does a great job) tells me that I've got the best value there is.
I have limited need for a pension adviser. When I needed one, I was happy with the service and the charge (which was negotiated, not expressed as a percentage of fund), but I think there's price gouging in this sector also, particularly when the charge is expressed as a percentage of AUM.
I suspect that my exposure of such overcharging is part of what's annoying some people on this forum.
Gordon Gekko
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Being ‘called out’ by you feels like being savaged by the proverbial sheep.
Colm’s posts are enjoyable, but his approach is demonstrably misguided. It is a waste of time for a poorer outcome.
Colm seems to enjoy it as a hobby, which is fine for him, but my 16 year old could have got him a better outcome for a cheaper price.
I’m not having a go at Colm, just his approach which is naive and misguided. The massive single stock holdings alone are ridiculous.
As for fees @Colm Fagan, it was unclear from your posts what exactly they are, hence I said “0.5% plus VAT or 0.6% or whatever it is”. Turns out it’s 0.522%. Hardly a massive difference. The key point is that my teenager would spot that buying Zurich’s equity fund in a large ARF for 0.5% would be cheaper and would give better outcomes versus your approach of pouring through financial accounts, shorting Tesla, and getting carried out.