Performance Update for Colm Fagan's ARF

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Hi @Johnny apples

I had a look at the last 5 and 10 years.

Over the last 5 years, the Global Index tracker has returned c. 80% versus Colm's 42.5%

And over the last 10 years, the tracker was up 193% versus Colm's 139%

Sure, there may be some adviser fees. I know @GSheehy charges 0.25% p.a. for his execution only service.

In summary, we have an experienced finance man seriously lagging a reasonable benchmark in his equity allocation. I struggle to see how Colm's posts help Joe & Josephine Arfer in any practical way whatsoever! Can some of the posters who enjoy Colm's post explain how they believe Joe & Josephine benefit from these posts? I genuinely can't see it myself.
 
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Johnny apples said:
Cumulative is what matters. € 10,000 invested in 2012 , what it worth today ? based on all three investments.
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I've just put the annual return figures price provided into a table for ease of reading. I'm not the source for the actual data.

If somebody wants to provide the cumulative returns (for each year?) then I can add them to the table or to a separate table.
 
I'm not skilled enough to calculate accurately, but figures might look very different once done after compounding
 
Johnny apples said:
I'm not skilled enough to calculate accurately, but figures might look very different once done after compounding
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As I say, if anybody (ideally the originators of the original annualised returns data) wants to provide cumulative return figures (for each year?) I'm happy to add them to the table or a second table.
 
Could I ask which provider you are using?
 
ClubMan said:
As I say, if anybody (ideally the originators of the original annualised returns data) wants to provide cumulative return figures (for each year?) I'm happy to add them to the table or a second table.
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The reason I'm interested in the figures are as follows. I've listened to a few different commentators explaining the effect volatility has on compounding . The reasoning is that if two different investors both had returns averaging 10% per year for 10 years but investor A had wilder fluctuations as in up 30% and down 30 versus investor B with lower volatility as in up 15% and down 15% , then the effect of compounding would be greater for the lower volatility fund. Correct me if I'm misinformed
 
Johnny apples said:
Cumulative is what matters. € 10,000 invested in 2012 , what it worth today ? based on all three investments.
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Cumulative Returns (Based on the Data from Clubmans Table), ignoring distributions (and ignoring 2011)
YearManaged fundIndex trackerColm's ARF
2012​
1.121.141.24
2013​
1.361.351.52
2014​
1.611.621.77
2015​
1.791.752.00
2016​
1.972.001.89
2017​
2.162.112.41
2018​
2.032.022.04
2019​
2.632.642.96
2020​
3.022.743.02
2021​
3.853.663.50
2022​
3.093.183.22
2023​
3.773.763.82
2024​
4.844.744.22

Managed fundIndex trackerColm's ARF
Avg Return
13.8%​
13.5%​
12.8%​
Std Deviation
0.14​
0.13​
0.16​

A few pieces of Context, Colm's performance is far superior to the vast, vast majority of ARF investors who would be mostly invested in "Lifestyle" or balanced funds which would include a high proportion of Cash or Bonds.
However it is possible to get an even higher rate of return with less risk by choosing the Globally diversified Index tracker.
The only reason the Managed fund outperformed the Index tracker was the huge difference in performance in 2020 (14.72% Vs 3.87%), a difference so large that I would ask to double check that original information).

Colm's overall strategy (invest for the long term in almost exclusively equities) is the right strategy.* Cash, Bonds and ALT's will drag on performance. It's knit picking but tactically, by choosing the Globally diversified Index tracker, it is possible to get an even higher rate of return with less risk

*with the caveat that you have enough to weather down years.
 
You may be referring to "pound cost averaging" which is a mathematical feature of regular investment.
But is fund A is up 50% having been all over the place, it is no different from fund B which is up 50% nice and steady, as far as an ARF holder as concerned.
 
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Hi @Johnny apples,

If you were investing a lump sum, the sequence of returns doesn't matter an iota.

If you are investing in an ARF and drawing down money, the sequence of returns does indeed matter. If I get a chance later, I'll model, say a 4% annual withdrawal. However, I wouldn't expect much of a difference in the key takeaway here.

I forgot to mention earlier that the returns from the Managed International Fund are better again than the index fund but I didn't include it as there are certainly managed funds that underperformed the tracker fund also.
 
AJAM said:
However it is possible to get an even higher rate of return with less risk by choosing the Globally diversified Index tracker.
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Isn't that Gordon's key point?
And the difference is even bigger over different timescales (say, over the more normal period chosen for comparative purposes of 5 or 10 years)
 
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Louisval said:
Isn't that Gordon's key point?
And the difference is even bigger over different timescales (say, over the more normal period chosen for comparative purposes of 5 or 10 years)
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Well Colm was actually beating both the other funds right up until 2024 (albiet with more risk).
My point is that Colm overall approach is correct, but for the average investor you can optimize it to be even better.
Paraphrasing, but I think Gordons point is that Colm is a "Fool" for even trying to pick himself. But the reality is that Colm is far better off than the vast majority of ARF investors.

Colm is in the right forest and Gordon is saying he's stupidly picked the wrong trees. But most everyone else is not even in the forest.
 
Louisval said:
...I struggle to see how Colm's posts help Joe & Josephine Arfer in any practical way whatsoever! Can some of the posters who enjoy Colm's post explain how they believe Joe & Josephine benefit from these posts? I genuinely can't see it myself.
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Is Colm trying to help Joe & Josephine make an investment decision? I'm not so sure. On a personal level, as someone who will eventually drawdown from an ARF, it's interesting to see how he's getting on, through the ups and the downs. Would I invest the way he does? No I wouldn't. I'm all-in on a global equity fund, and have neither the inclination nor the time to even try to do anything different. I formed that opinion in a large part thanks to reading the debates that go on on threads like this. Could someone like Joe or Josephine be spurred on to follow Colm? Maybe, but I tend to think there's enough information on AAM to allow people to make up their own minds, just as I have done.

@Colm Fagan I don't see myself following in your footsteps in terms of your approach, but for what it's worth I think AAM is all the richer for your updates, and I'd certainly like to continue to hear how things go for you.
 
Would it be fair to say that despite what the annual figures look like, that in fact Colm's returns are pretty similar
 
Johnny apples said:
Would it be fair to say that despite what the annual figures look like, that in fact Colm's returns are pretty similar
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Yes, which is what you should expect.
All three options in the table are 100% Equity options, so they should have similar outcomes.
The biggest determinant on returns, will be what you invest in (Equities vs bonds vs cash).
Despite this, Humans spend the vast majority of their time arguing over the minutia of which equities to pick.
 
GSheehy said:
All figures net of all costs
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No matter how many times you say it there are still those who can't/won't believe it. My comparison figures are on an execution only identical basis where an execution only fee is negotiated with the provider (by me) because the ARF is very substantial. Net means Net.

Louisval said:
I know @GSheehy charges 0.25% p.a. for his execution only service.
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The website states that "The regulated entity is paid 0.15% to 0.25% by Zurich Life from the quoted annual management charges." It also states that "Lower AMCs available for substantial (circa €200k+) single contribution transfers." which translates to less than 0.75%.
 
If you are making a constant percentage withdrawal the sequence of returns does affect your cash flow, which of course matters, but it makes no difference to the final fund value.
 
AJAM said:
a difference so large that I would ask to double check that original information).
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Yes, it's accurate. If you were in the other concentrated (50 global stocks) on same platform, the figure was 18.31%.

If the difference was other way round on the Managed V Index tracker no one would question it
 
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