Performance Update for Colm Fagan's ARF

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.
This is oversimplisitic and ignores the regulatory landscape. Qualifying Fund Managers aren’t two men and a dog doing ‘basic bookkeeping and payroll’.

The two biggest risks you’re ignoring are:

1) The risk of the lowest cost provider collapsing or perpetrating some sort of fraud against you; people should view the regulatory ‘home’ for their pension or ARF as very serious stuff; cost shouldn’t be the main driver.
2) Your investment approach is, best case, costing you money and, worst case, will blow-up your ARF. My sense is that you’ve been lucky to have ARF’d right when the world started to recover after the GFC.

For the avoidance of doubt, I enjoy your contributions and you’re clearly an extremely intelligent person. I just disagree, fundamentally, with your views on certain matters.
 
The earlier thread on my ARF investment strategy was closed last evening, before I had a chance to refute false and derogatory claims (almost all deliberate, I'm sure) about my competence to look after my ARF investments. I'm thinking particularly about @Gordon Gekko and @Louisval. Both almost certainly knew that nearly all of what they were wrote about my approach was completely untrue. I can't allow those false claims to stay on the record.

First of all, so as not to lose sight of the woods for the trees, @AJAM wrote
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.
@AJAM is right, of course. All the evidence shows that someone my age (now 75) would be strongly advised by @Louisval, @Gordon Gekko and their like to invest a significant proportion of my ARF in bonds and cash, given particularly that the ARF is now my sole source of regular income other than the contributory OAP: I don't have any other pension entitlement.
I recounted in my posts what actually happened over the last 14 years. @Gordon Gekko and @Louisval gave theoretical reconstructions of what might have transpired if ARF holders had invested in certain funds, which presumably were chosen with the benefit of hindsight because they were seen - thirteen years later - to have been top performers. There is no evidence whatsoever that any real person ever followed the theoretical course of action outlined.
Secondly, the performance of my ARF is net of all charges (even the once-off fee in 2024 to my pension adviser for changing ARF providers). On the other hand, the unit-linked funds mentioned by my detractors are all execution only and don't allow for the extra advisory and ARF provider costs.
Thirdly, people tend to focus the comparison on the position at end 2024 when, as I readily admitted, I had just experienced a major fall in the value of one investment. Despite that, the results were still excellent.
Here is the same table, with an additional column added to show which fund was ahead at various year-ends:
At 10 of the 13 year-ends, my ARF (net of all charges) was ahead of the (completely theoretical) index tracker and the (equally theoretical) managed fund (before ARF provider and adviser charges). Thus, in every one of those years, I would have had to withdraw a smaller percentage of my fund in order to meet the regular withdrawal (which broadly increased in line with inflation), for which I was given no credit.
So much for @Louisval referring to me as "an experienced finance man seriously lagging a reasonable benchmark"
the previously stated underperformance of Colm's fund. (The increase is marginal not the underperformance - the cumulative revised under-performance over the 10 years is over 25%).
What "previously stated underperformance" was @Louisval referring to? I would very much appreciate if he/she could do the honourable thing and withdraw that and similar false statements, but I fear I'll be left waiting. The same applies to @Gordon Gekko who has supported every claim of my underperformance as well as adding their own completely false claims. For instance, @Gordon Gekko's final comment in the last thread was priceless:
"Your investment approach is, best case, costing you money and, worst case, will blow-up your ARF."
For what it's worth, my ARF is far less likely to blow up than one effected through an institution, because there's a direct link to the underlying investments with no intervening institution that could "blow up" to use @Gordon Gekko 's words.
@Gordon Gekko also claimed that I was spending a lot of my time on my ARF. I don't know how many times I've told readers that I hardly ever look at it. That also shows in the activity in the fund. In the first 50 weeks of 2024, there were just two small sales, amounting to less than 2% of the fund. There was no activity whatsoever in 2023. Dividend receipts were enough to pay the 6% income in its entirety. If my money were invested instead in unit-linked funds, I'd have had to sell some units every month to fund the withdrawals - and presumably I would have to seek advice from a pension consultant (at a cost) on which funds to sell. I've had to spend far more time responding to stupid comments on AAM than I ever spent studying the investment performance for my ARF.
Finally, an apology to the contributors who asked constructive questions - and there were many of them. I'm sorry that I haven't been able to answer them, because of having to respond to my detractors.
I enjoy writing these updates and some of the comments by others are excellent and thought-provoking; however, it's just not worth it when I have to endure ignorant sniping by anonymous critics. I may just stop providing updates.
 
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The earlier thread on my ARF investment strategy was closed last evening
Whoever said pensions were boring, huh?

Really enjoyed your posts Colm. It's fascinating to see real world examples and I very much hope you keep them coming.
 
Folks

Colm has asked me to reopen the thread but it was the source of multiple reports last time and took up a lot of time of the moderators.

I will reopen the thread but will close it again if it becomes time consuming again.

Note that these guidelines will be fully enforced
  • Disagree as much as you like, but no abuse or snide remarks
  • At the same time, be a bit thick skinned. If someone isn't nice to you, ignore them. Or deal with their point. If you abuse them in return, you will be banned from the thread.
  • Do not accuse anyone of trolling. If you think that they are, report them.
  • Stay on the topic which is Colm's ARF return and comparing it with a passive investment
  • If you want to discuss your own approach to investing start another thread.
 
My ARF’s performance for the first quarter of 2025 is a tale of woe. The return was a negative 4.8%.

And it all seemed so promising in early January, when I was giving readers my 2024 performance update (post #70). That told of my decision to sell more than three-quarters of my Apple shares in December at $252.82 a share, causing its share of my portfolio to fall from 23.8% at end November to just 6.5% by year end. By 31 March 2024, Apple’s price had fallen 11.3% since year-end, down 15.1% in Euro terms because of the weaker dollar, so the decision to sell the bulk of my shares seemed to have been a smart call. I also converted most of the net proceeds to Euros, which saved me from some of the dollar’s fall.

Unfortunately, I reinvested close to half the sale proceeds in Nvidia, a world leader in AI, at $137.20 a share, also in December. Its share price rose to over $140 in January, but it tanked when the Chinese AI company DeepSeek announced that it could do wonders with older, cheaper technology, that it didn’t have to spend an arm and a leg on Nvidia’s more expensive products. By 31 March, Nvidia’s share price had fallen even more than Apple’s since year-end, down 19.3% in dollar terms, down 22.7% in Euros.

However, the biggest faller of all in the quarter was Novo Nordisk, the Danish pharmaceutical company, which had been my star performer to mid-2024. My 30 June 2024 update (#38) told how the Novo Nordisk share price, at over kr.1,000, was more than five times its end 2020 level. I was sitting pretty because I had held onto my shares for the entire period. Happy days.

Unfortunately, I lost out badly by continuing to hold them all. The price was down 38% by 31 December, to kr.624.2. The misery has continued into 2025. The price on 31 March was down another 25% from year-end, at kr.469.80 a share, so Novo Nordisk has the dubious distinction of being my worst-performer by far in the quarter.

Given all this bad news, the wonder is that the value of my portfolio only fell by 4.8% in the quarter. The main saviour was my largest holding, Phoenix Group Holdings. Its share price rose 12.3%, from £5.075 at 31 December to £5.70 at 31 March. The cash proportion was also much higher than normal at year-end, which helped to cushion the fall. Cash at 31 December was €11,737 per €100,000 of fund; the corresponding figure at 31 December 2023 was just €622, which is more in keeping with my strategy of holding close to 100% in shares. The only reason the cash was so high at 31 December 2024 was because everything seemed so expensive at the time. In hindsight, it was a fair assessment. The cash proportion had fallen to €3,351 per €100,000 of year-end fund value by 31 March 2025. Cash flows in the period were: dividends of €95 (the first quarter is always bad for dividends), less pension withdrawals €1,475, share purchases €6,864 and costs (platform fees, stamp duty and commission on share purchases) €141, all per €100,000 at end 2024.

Despite the recent setback, the fund’s long-term performance vindicates my original decision, when I ‘retired’ at end 2010, to invest close to 100% in equities. For every €1,000 invested in December 2010, I withdrew €1,168 in the intervening fourteen and a quarter years and the fund value at the end of the period was €1,810. Allowing for withdrawals, the equivalent compound return over the entire period was 10.4% a year.

Of course, I would be much better off now if I had cashed everything at end 2024, but I have no time for those who claim to be able to forecast turns in the market: they make fortune tellers look respectable.
 
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