AskPaul investment club/ Zurich dynamic fund

bs2014

Hi all,

Been following this page for a few years and quite like the content. I've put on the longer finger investing but with inflation the way it is, feel compelled to get on the boat. I watched a webinar which was saying the fund grows nearly 10% a year. I'm not interested in a DIY job via degiro. I like the idea of getting regular newsletters of how the fund is performing etc.

I suppose my question is, I don't know what I don't know. My concern is, is it all a bit salesy and are you paying for a zoom meeting with a financial planner who basically is selling you a product. Their pension consultations are free....theres nothing free in this world anymore. I also don't like the fact you just get randomly assigned a financial planner when you book and pay.

The other concern I have is, I believe this fund is not a 60/40 split. I know Paul is quite against these from his posts. However, other similar financial planners like Eoin Mc Gee are very much in favour of 60/40. So it leaves me not knowing who to believe or trust.

Equally, I am sure there are many financial planners dotted around the country who have access to equally successful investment funds but don't have the social media following to promote. Any recommendations?

Has anyone joined the zurich dynamic fund. I only want to put 20k or so in as I want my main savings for my house....whenever that may be. I want some advice on using foreign banks with raisin for my main savings.

Anyone have any dealings with Askpaul, I'd love to hear directly on your experience good/bad and any other financial planner recommendations.

Thanks

Nody

Well an index S&P 500 fund has had 13.57% per annum in the last five years, the fund was 9.1%; on a 10 year basis S&P500 did 10.41% based on 2012-2022 period; so exactly what are you paying for "active management" if they can't beat a basic index fund (and they are 70% NA in the first place on stocks anyway)? I don't see the fees listed in their fact sheet but I'd guess they would be in the 1%+ for that as it's "active"; which means you lose even more money (no matter if it goes up or down you're charged the full fee) compared to a basic index fund for managing to get you worse returns (ETFs are around 0.1% so you already gain 0.9% every year on fee alone).

This is before we talk any "management fees" from your financial investor. Honestly if all you want is an shoot and forget investment it's best to get a cheap global index fund that you buy yourself and then forget about it until the day you need to cash it in. Alternatively and the better (imo) option of simply set up an auto buy of X EUR a month buying the global index fund (this helps offset ups and downs much better than a once off buy).

I'd not go for anything but stock market fund(s) at the moment because inflation and rising interest rates will be really harsh on bond funds (remember they already bought all those low dividend bonds already; those are not going to suddenly upgrade so you're looking at very low yield for years because of their old low yield bonds which shrink in value as higher yield bonds get issued onto the market). If you want to offset some in safer savings then look at various types of bonds instead with lock in times (likely to yield less than inflation; same applies to any form of bank account).

As a general caution as well never invest money on the stock market you're not ready to lose or that you need in the next 5 years.

bs2014

Thanks for the advice. Interesting viewpoint. I guess my sense with an active managed account is that opportunities will be anticipated catching growth spurts and market drops anticipated whereas my sense with a passive fund is it just lags of the market. Also using the likes of degiro for say an ETF, I'd be too nervous picking a fund myself. Fair enough I might take a 1000e and pick a portfolio of 10 well priced shares to invest in as a sort of hobby for small money.

Nody

https://www.boards.ie/discussion/comment/121061428#Comment_121061428

The idea is that they are suppose to be nimble and do better stock picking but the reality is that they never do long term basically and they charge you a higher fee for the pleasure. Think of it like this; if they could pick stocks that are better than the index why would they bother to charge a general fee for it? Why not charge only a percentage of the amount they beat the index fund with? Because they would lose money by doing that and hence they charge 1%+ for performance below an index fund over time. Great for them (they will pull in millions every year no matter how poorly they do); sucks for the buyers (paying over the top for worse performance). Remember an active fund would need to beat the index fund with at least the fee percentage alone to break even at any given point.

The second problem to this and it's been highlighted before is they can be much more nimble if their job is to grow 10 million to 20 million compared to 5 billion to 10 billion. This is because they can't bother with buying that small stock with a market cap of 30 million because it will not move the needle for their funds. Hence they need to go after the really big companies and hope they guess right but once again then a simple index fund will generally give you better yield for lower cost at that point (and remember ALL active funds have that issue; so thousands of funds all chasing those big cap companies that are suppose to outperform the market).

As for what to buy; here's the list of four ETFs from Vanguard to give you a global portfolio, you can buy 25% each in these funds for example (or what ever percentage mix you feel comfortable with):

VGK - Vanguard FTSE Europe ETF

VXUS - Vanguard Total International Stock ETF

VOO - Vanguard S&P 500 ETF

VPL - Vanguard FTSE Pacific ETF

This gives you 25% Europe, 25% APAC (excluding China directly but do have HK which is important in my book as I think China's economly will crash and burn), 25% Top size US stock and 25% general global fund (excluding USA, if not 70% tend to end up US stock anyway) as an example (or you can go 20% and buy a fifth targeted fund for something you think will increase such as tech, healthcare, basic/luxuary etc.). I can't tell you what region/area is going to boom next (if I knew that I'd go invest myself without saying anything about it) but it offers you a wide regional spread. You can obviously change this to other critera such as Health care, cupboard staples or what ever else you feel comfortable with as a basis as well in Vanguard funds (or other companies).

No one can tell you what will go best; that's why I see broad index funds (preferably global) as the way to go; it's not going to be the biggest increase possible but it gives you a wide base and the safest (relatively speaking as we're talking stocks here) chance for value appriciation over time with the minimum amount of work at the lowest cost in fees (and fees is what kills active funds vs. index fund in value appriciation as they perform worse and cost more). It's not as sexy as an fund manager promising they are going to pick the right stocks but looking at active funds over the decades I'll take slow and steady over shiny rainbows and unicorn dust promises. You don't get rich quickly; you get rich over time by consistent investments with low fees eating into said value gains.

Usual caveats here about this being my personal view, I'm not an financial advisor, I don't own Vanguard directly (but probably indirectly in one or more funds I own) or any other ETF company (same disclaimer about funds) etc. This is simply my personal view of the finance world :) I'm never going to buy an NFT, bitcoin etc. and I've for sure lost thousands of procent as I could have bought them at $1 (as a gamble because no one knew at the time) etc. From over two decades of investing the one thing I've learned is that quick gains are luck rather than skill in general and you only know the difference afterwards (and luck is by far the more common factor). Hence index funds and accept I'll not 100x my money in 3 months but I'll make steady progress over the years with lower risk; I value limiting my downside over trying to maximize my upside by gambling (and yes, that's my view on various crypto coins, NFTs, Robinhood stocks etc.)

A contrarian view would be that it makes no sense whatsoever to compare an 100% Equity index tracker with a mixed fund that can have an equity content as low as 75%. If you want to do like-for-like comparisons then compare the S&P to something like 5*5 Americas Fund.

Portfolio transaction costs and other ongoing costs are included in the fund performance/prices on the Zurich website. Are they included in the quoted S&P 500 Index?

Annual Management Charges aren't listed on the Fund Fact sheet because you don't know what they're going to be until you decide where and from who you are going to buy the product. The distribition channel decides what they're going to charge you via AMC - could be 1.6% pa or could be 0.65% pa.

The majority of contracts available would cover the Government Levy of 1% by allocating 101% to the premium invested, so there's no cost on that score. Not getting the 101% would have a drag of circa 0.15% pa on your fund performance.

If you don't like active management of equity funds you can also choose global index tracker under the same product. If you want the 60/40 split you can do that by allocating 60% to an equity fund and 40% to a bond fund. Dynamic will never have that split, it's currently 94% in equity

Oh, and you've no admin on exit tax/deemed disposal to do because the provider does all that for you.

Supercell

https://www.boards.ie/discussion/comment/121061489#Comment_121061489

VOO is a US ETF, cannot buy here (legally).

You can however buy VUSA instead.

Nody

We are talking about a fund that has a risk rating of 6 out of 7, comparing that with an S&P500 index fund is a very valid comparison as they have the same risk as their Indexed Global Equity which is a 100% stock fund. The fact they deliver worse results is on them and their failure to deliver value.

That's the current rating based on the equity exposure.

If it back down to 75/80% it wouldn't be a 6.

The S&P will never have bonds/cash it it.

There's no equivalent fund to S&P on their platform. The 5*5 Americas might be as close to that as you can get. Do a like-for-like (whilst disclosing all the costs/chages on accessing the S&P) and compare.