Set Index And Thai Mutual Funds

[AyG]

The SET plunged 9% this afternoon in heavy trading, though subsequently recovered to end up down 2.4%.

The newspaper reports are pretty wishy-washy:

- Energy companies down (given the fall in oil price)

- Foreign investors net sellers

- "Unspecified rumours" (according to the head of the Junta who declined to elaborate)

- Buyers on margin forced to unwind their positions

- Selling of US Emerging Markets ETFs.

None of this really adds up to me. A 9% fall is pretty dramatic - a typical black swan event that happens every month or two. However, I really can't see what has spooked the market so much.

O, Thai Market Savants! Any thoughts?.

[fletchsmile]

In addition to factors you mention AyG, I think at least part of it was technical and system related. I believe the SET stopped trading for a short while some time after 3pm.

I was watching the SET50 index, SET50 options and futures (TFEX rather than SET). The system seemed to clam up. A few things that were unusual:

I couldn't see bid-offer quotes on the SET50 options, only settled trades on the RHS of the screen coming thru futures and options.

There were deals coming thru as settled on the RHS of my screen at around 870-ish for the December futures, whereas the SET50 index was showing around 913, and wasn't moving There shouldn't be this much of a basis difference between the index and the futures, particularly given the December futures expire soon. That was around 40 points diff. Usually it's no more than about 5, depending on supply/demand/sentiment.

So while the main SET index and SET50 plunged by almost 10%, the futures were down by nearly 14%. I suspect the dramatic fall in futures also contributed to accelerating sell-offs, as there seemed to be quite a bit of panic in the market. Definitely on the futures,options and SET50. that won't have helped if the SET 50 stock market is frozen/halted but derivatives trading on TFEX continues.

There was also therefore a large basis risk gap between futures and the underlying index that shouldn't be there. When I look at the trading highs and lows, for futures the low was 874 but for the SET50 index it was 912 during the day

Volumes were also very high today. Futures had a higher volume today than the total for the whole week before last (4 day week). I think they were also going to change the constituents of the SET50 index. (Don't know if that was a factor or not)

So looks to be like a combination of fundamental factors made worse by technical/system factors. Most people would probably have their eyes on the SET and shares. It was interesting watching the TFEX future/options/SET50 index as it adds a whole other dimension.

Will be interesting to see what they say the reasons were, as it looked a mess to me

Cheers

Fletch

Edited December 15, 2014 by fletchsmile

[fletchsmile]

...

None of this really adds up to me. A 9% fall is pretty dramatic - a typical black swan event that happens every month or two. However, I really can't see what has spooked the market so much.

...

One thing it did remind me of a little was October 1987. Large one day drops, partly result of technical trading issues. Obviously on a much smaller scale, and thankfully this time just Thailand related though. Luckily it also stopped at a "mere" 9-10% drop in the index and 13% drop in futures, then recovery, compared to around 25% for UK/US back in 1987.

Cheers

Fletch

[DavidMavec]

So would now be a good time to buy? :-)

[fletchsmile]

So would now be a good time to buy? :-)

Hehe the 60 million baht question.

A few answers:

1) The time to buy was 15:31 today, when the market was down over 9% - although even then I'm not sure whether the system was letting you do that. I'm not sure whether trading was officially halted or systems just ground to a halt. The official circuit breaker is 10% lower than the previous close (1514.95), but at today's lowest 1375.99 it was only down just over 9%, so it shouldn't have been the official circuit breaker

2) It depends

3) Expanding on 2) - depends what you are looking for. If long term investing, today was just noise. In the great scheme of things, we're just a bit cheaper than the start of the day. The pullback in last couple of weeks has let off a bit of steam. P/E is around 17.5 for the SET now so not cheap but better than it was. I would still put money on the market being higher 5 years from now, and it's better value than a couple of weeks ago.

I was having a conversation with a Thai friend at lunch today. He was happy the market had pulled back, so he'd be buying cheaper. He likes to buy in Dec and sell Jan 3 years and a month later, so looks to time things in Dec. I mentioned I buy regularly every month, and the market was up just under 20% since start of the year. So in reality even Dec's best price would likely have been worse than monthly averaging On average the longer you're in the market the better...

4) For short term trading, I'd bet that SET is up tomorrow. SET has been down several days in a row. US has opened up today, as has UK and Europe. So if they hold the odds are on an increase tomorrow

That said, as we've seen today the SET can be very unpredictable. Hence why I prefer the long term view, and time in the market rather than trying to time it. 90%+ of my exposure to the Thai market is long term investment in unit trusts - so today was just noise.

I don't hold any individual Thai stocks, and the only trading I do for Thai equity is TFEX futures and options. I was quite happy today that my TFEX trading positions were small, in winding down for Xmas and the year.

Anyone new to the market trading individual stocks, or with large long short term trading positions must have been bricking it today, particularly if on margin. Not exactly the frame of mind you want to be in for Xmas - especially as the exchange is open on 25th

Cheers

Fletch

Edited December 15, 2014 by fletchsmile

[DavidMavec]

http://www.khaosodenglish.com/detail.php?newsid=1418646644

Junta Leader Blames Stock Market Plummet on 'Rumours'

[AyG]

And so the bloodbath continues, with the SET opening down 2.4% and continuing to fall. It's currently down about 3.0% on yesterday's close.

[fletchsmile]

And so the bloodbath continues, with the SET opening down 2.4% and continuing to fall. It's currently down about 3.0% on yesterday's close.

At the time of posting when I signed off yesterday US and UK were still in positive territory so I would have backed a rise today. Unfortunately they didn't hold that positive territory, and when I got up this morning and saw they both ended down, so I was expecting likewise on the SET - wasn't disappointed

Let's see how they close today. US futures down at the moment though...

Cheers

Fletch

[Cheesekraft]

read in tony robbins new book, 96% of mutual funds fail to beat index funds in the long term. just thought i'd share t hat

[fletchsmile]

read in tony robbins new book, 96% of mutual funds fail to beat index funds in the long term. just thought i'd share t hat

The answer to that one is simple: don't invest in 96% of mutual funds

I guarantee the stats will also be based on US data

Cheers

Fletch

[fletchsmile]

Cheesekraft,

Thanks for the input, That comes up from time to time. Below are 2 quotes from another thread, which give some balance/ different view to the statement form Tony Robbins. As it comes up from time to time, I've cut and paste below

http://www.thaivisa.com/forum/topic/756518-how-to-start-a-mutual-fund-for-absolute-beginners/page-2

------------

Quote:

"Here's my take on these. If you are a US citizen living in the US, buying a US mutual fund because it's less risky than an EM one then fair enough. All the above quotes from Luang would support this. This dumbed down approach will likely yield better results for your average investor who doesn't know much compared to investing in "an average fund" or the "majority of funds" at random

Unfortunately it's only part of the story. You then have to ask: who's pushing this dumbed down approach? and why? and what will it mean going forward and will you ever learn anything?

The answer to the last question BTW is no. Because you'll never learn about investments or when you could easily do much better than a tracker or why. You're always going to slightly under perform the index

Specifically on your points Expat J. I don't have access to a time machine. On the other hand I've been investing in Aberdeen Growth for 15 years+, including when it was under a different fund management company who they took over (who happened to have links to a company I had worked for in the industry: Aberdeen-Nakornthorn-Schroders). I thought timing was right for the Thai market, and around 1999-2000 I started to put a regular lump sum in each month for about 2 years.

For arguments sake I put in 50k a month for that time say THB 1mio rather than USD 100k as I wasn't that well off back then Now you're saying I would have paid THB 240k less in fees with your ETF so my return would be lower.

Absolutely wrong! It's the total return after fees that count. The link Deaconbell provided showed that between its inception in 1997 and today Aberdeen Growth returned THB 10.65mio. Now here's the hypothetical bit rather than what happened. You can trawl the internet and cherry pick the best ETF fund you will ever find with hindsight to boot. You will never have made more than THB 3.57mio in that period. That's what the SET TRI index returned and the best an ETF tracker do will underperform that a little .

Well you can keep your extra THB 0.24mio in fees for your superior hypothetical return, and I'll keep my THB 7mio extra profit - which is real. Maybe I did pay 9x in charges (0.24mio) but you earned 3x less (7mio less). I think that's fair the fund manager earned it. I have to be honest though, I can't vouch for the 1997-today figures as I invested later. My return BTW was actually higher as I decided to start after the crash

I've been invested in the fund for 15 years or so. For many of those years I've had people throwing the passive vs active debate at me, and for many years I've been saying I prefer this fund. Every time I get accused of cherry picking based on history or that won't happen in future. So would you tell me I'm just lucky year after year?

{I even mentioned above that their out performance has slowed, and offered reasons why. Meand knows his Bualuang fund. I know that's top over 10 years I follow it. I read about it on here a few years back. That's another "lucky one year after year". I can't invest in it though as my bank doesn't offer it, and I don't want to open an account specially when there are others out there. Krungrsi Div LTF is another "lucky" one.

The whole point is I'm not picking at random. I'm not picking in a developed/perfect market and haven't been for 15 years+. I'm not picking "most funds" and I'm not picking your "average fund" and not at random either.

I've also been very lucky with Aberdeen's America fund. Every year for years I've NOT been investing in it, and most years it has under performed the market. Boy am I lucky I didn't pick that at random.

So there you have 2 examples: The stats would tell you I'm picking those 2 funds at random so I would likely under perform the index, and the US gurus would write articles how much better I'd hypothetically have been with an ETF tracker instead of the 2 I'm picking at random. The reality is I've been picking 1 for years and not picking the other for years and more years than not it's paid off.

As you're a Brit: Another "lucky" pick by the way used to be Neil Woodford's Perpetual Income fund. I was lucky for a couple of decades picking his fund, and he was lucky for about 25 years, finishing most of them in 1st or 2nd quartile and about 3 in the bottom quartile. He's moved on now to his own company

Another "lucky" Brit pick used to be Anthony Bolton with his Fidelity Fund. I used to pick his fund for years, and he was "lucky enough" to have stellar performance in many years. Not all.

So if I'd been accepting the "dumbed down" approach: 20 years ago if I'd have gone for that tracker (BTW they weren't really around so much then) I wouldn't have gone for Neil Woodford and got lucky, so I wouldn't have gone for Anthony Bolton and got lucky and I wouldn't have gone for Aberdeen Growth and got lucky and I wouldn't have NOT gone for Aberdeen American and got lucky. I also wouldn't have learned anything. On the other hand I'd be sat there happy "knowing" - backed up by the US gurus telling me - I'd have hypothetically done better than "most funds" and the "average" fund and people who pick at random, because I'd saved a bit on fees. {Yes in fairness I do get it wrong sometimes! Then again I'm lucky because it's less than half the time }

One last question: did you bet on Everton to beat Chelsea as there's only 2 teams right, So it's 50/50?

Myself I looked at the form guide, past history, line ups, read the newspapers and sports pages, injury list, weather conditions, compared Martinez to Mourinho and was "lucky" enough to pick Chelsea to win

Cheers

Fletch "

------------------------------

[fletchsmile]

From the same thread, as the approach of "low cost, ETFs from the US" regularly comes up and is often advocated by Americans in particular. Here's some reasons why the likes of Tony Robbins comments wouldn't have been such a great idea for me as a Brit (and many others) in Thailand over the last couple of decades:

Not to say their approach isn't valid for some, but just another side to it....

-----------------------------------------------------

quote:

"Here's a quick list of why taking THB 100k from Thailand and investing it in a US tracker in US equities in USD wouldn't have been a realistic recommendation over the last 15 years, and why those risk EM funds might have been easier:

- Not many low cost mutual funds around in Thailand

- Currency exposure if you're looking to end and spend in THB

- Banks fees to send money out of the country + admin/ paperwork

- Bank fees to bring it back + admin/ paperwork

- Exchange rate costs sending out

- Exchange rate costs bringing back

- KYC and AML rules and paperwork cross border

- US regulations and where they might lead in the future

- Currency controls. At times would have struggled to bring money into or out of Thailand if needed in an emergency

- Need to understand the difference between THB and THO (offshore)

- At times the difference bewteen THB and THO has been as wide as 10% in the last 15 years -big loss to get hit with

- Know which is better onshore or offshore rates

- Possible platform fees and other charges

- System and internet problems

- US bureaucracy and admin for non - US citizens

- Filling in W8BEN forms and ensuring correct dividend rates

- General tax issues in US and Thailand

- Specific tax issues eg related to W8BEN and WHT on dividends and resultant loss of returns compared to buying a similar ETF outside the US

- Difficulties if OP dies and his wife and kids are in Thailand. How to get the money back and time taken?

- Support and comments on when to exit an ETF if wanted

- Protection should something untoward happen and the admin hassle dealing with it cross border

I'd hope a decent "stick your money in a US tracker fund outside Thailand cos it's cheaper and less risky" would cover these angles for starters

These are probably the main reason I'd say look for a Thailand solution in OPs case, whether Aberdeen, Bualuang, etc etc

Cheers

Fletch "

--------------------------------

Edited December 18, 2014 by fletchsmile

[fletchsmile]

Came across this article today, on Australian REITs. With people seeking yield, and wary of simple equities/bonds/commodities etc they can be worth considering.

Australia based investments can be a bit inefficient for me for tax, and I prefer Singapore for this sort of thing. For Aussies that can better tax advantage of their own tax system, might be of interest

http://www.theaustralian.com.au/business/markets/reits-fill-the-return-vacuum/story-e6frg916-1227159891387?nk=99719fc12abd9710816d27894b61a706

WITH the commodities rout weighing on the market in recent months, investors would be impressed by returns of some Australian real estate investment trusts, particularly niche trusts....

Cheers

Fletch

[ExpatJ]

The fact remains you save 1000s even 10,000s £ over a few years if you put your money in a low cost etf rather than a managed fund- ceteris paribus. And etfs outperform managed funds on average over time.

If you are happy to pay high fees and take the extra risk-good for you, it's worth a gamble sometimes.

Edited December 19, 2014 by ExpatJ

[fletchsmile]

The fact remains you save 1000s even 10,000s £ over a few years if you put your money in a low cost etf rather than a managed fund- ceteris paribus. And etfs outperform managed funds on average over time.

If you are happy to pay high fees and take the extra risk-good for you, it's worth a gamble sometimes.

Yes you do save fees. Yes the "average" or "most ETFs" fail to outperform the index they are bench marked against. The key assumption is that results from active managed funds are random, or you are picking blind, with no knowledge of what you're doing.

You've convinced me that in your case trying to achieve average index returns at lowest cost is the best way to go, as you don't have seem to have the expertise or inclination to identify good investment managers yourself or believe that it's possible.

For me, I'm happy seeking that out performance. When I get it right (which is more often than I get it wrong, as I don't pick at random) the out performance dwarfs the slightly higher fees. In one real life example alone, I'm THB 7mio+ better off for having paid THB 240k more in fees. That's probably a lifetime of fees in one go

Cheers

Fletch

Edit: BTW You're not necessarily taking extra risk either. Picking the right active fund manager could reduce your risk depending on their style and approach

Edited December 19, 2014 by fletchsmile

[fletchsmile]

Picking US fund managers isn't really my area of expertise, for a variety of reasons, but I was interested in the following article about T.Rowe that hit my inbox from Morningstar today

If I was an American, I'd probably delve a little further and consider whether my US domiciled funds (run out of the US rather than run out of elsewhere) are held with the right fund manager with the right strategy or not.

Seems to be consistently good performance. Particularly on US investments. As with all fund managers they are not consistently the best for everything, and they seem weaker in some areas than others. That's "one helluva" performance though...

Some good ideas of what to look for both past and future in picking funds. 88% in top half over 10 years.

Now if someone puts the effort in and cherry picks the best of those 88% - eliminating the bad performers 12% automatically. Reading up and doing further research on the best of the others, staying clear of the pitfalls mentioned, looking into individual fund manager experience, and upcoming retirements etc ...

I'm sure you'd be setting the odds above 50/50 and picking at random or even come to mention it choosing an average performance ETF tracker

T. Rowe Price Remains on Top

Departures of investment staff are worth watching, though.

T. Rowe Price has a long history of putting investors' interests first. It offers a reasonably priced lineup of sensible funds. The funds employ a risk-conscious investment process driven by fundamental research, which has led to good outcomes for fund shareholders across asset classes. Indeed, 88% of all of T. Rowe's funds landed in the top half of their respective Morningstar Categories for the 10-year period through November (79% and 82% of the funds did the same for the three- and five-year periods, respectively.) The funds have performed well on a risk-adjusted basis, too, typically exhibiting less volatility than peers and making them easy for investors to own. ....

http://news.morningstar.com/articlenet/article.aspx?id=677629

Conclusion: Either they're very good at what they do or they're very lucky / good at throwing darts Morningstar (who are independent seem to think the former)

Cheers

Fletch

Edited December 19, 2014 by fletchsmile

[fletchsmile]

Bit surprised at the SET today, started promisingly then finished slightly down, a couple of points. Given the US, and Europe rose strongly last night, and Australia did well this morning, I was expecting Thailand to end in positive territory. Started off well, but ran out of steam.

Still, can't complain, it's been a good year so far for Thai SET equities up over 16%. My Thai friend at work is happy he called the right timing more or less for December for LTF purchases - out by only a day. He is good at timing and good at trading generally - clever bloke. On the other hand it's been another year again where "time in the market" has bettered attempts "timing the market"

I think we'll get a bit more of a rally before end of the year, but who knows. Happy with where we are to be honest...

Very happy with my SET futures and options trading this year too. Unless the market tanks by over 12% in the next 6 trading days with me sitting by doing nothing, I should have a nice healthy profit there too - should be a few multiples of simple equities too Will probably buy a few far out of the money puts on Monday though just in case so I can have a worry free Xmas without thinking about trading positions.

On the other hand dipping my toes into Russia hasn't gone too well Down just over 20%! Looks bad at the moment - but sometimes that's the best time to invest. Only a small part of my portfolio and definitely for the long term roller coaster ride. I'd probably take a long term punt if (I hadn't done already), but I don't feel like doubling down. Doubling down often causes more problems than it solves, and more often than not doesn't work - though not always. I'll look to add more later, but for now will wait for signs of improvement first...

Cheers

Fletch

Edited December 19, 2014 by fletchsmile

[AyG]

88% of all of T. Rowe's funds landed in the top half of their respective Morningstar Categories for the 10-year period through November

That's hardly a ringing endorsement of the group, and illustrates a persistent problem with ranking of funds: the ranking businesses ranks funds against their peers, not in absolute terms. It would be perfectly possible for every single fund to have underperformed an appropriate benchmark yet produced the same statistic. What would have been much more interesting would have been the percentage of funds which beat their benchmark (after costs) for the same period. I suspect it would have been rather less than 88%.

[fletchsmile]

88% of all of T. Rowe's funds landed in the top half of their respective Morningstar Categories for the 10-year period through November

That's hardly a ringing endorsement of the group, and illustrates a persistent problem with ranking of funds: the ranking businesses ranks funds against their peers, not in absolute terms. It would be perfectly possible for every single fund to have underperformed an appropriate benchmark yet produced the same statistic. What would have been much more interesting would have been the percentage of funds which beat their benchmark (after costs) for the same period. I suspect it would have been rather less than 88%.

What it simply means is that almost 9 out of ten funds are above average when compared to their peers. If you're looking for funds that outperform the average fund or most funds, it's a reasonable starting point.

It's an interesting point you raise though. Here are my thoughts:

Yes in theory it would be possible for every fund from their very wide range to underperform their benchmarks. On the other hand by your same theory it would be perfectly possible for every single fund to have outperfromed their benchmarks. On such a wide number of funds both are statiscally very unlikely and close to zero chance. I know you know that

Also a fund that outperforms its peers will obviously be statistically more likely to outperform its benchmark than a fund that doesn't.

Yes it would have been nice to have comparison to benchmark. They didn't.

It's not feasible to compare a very wide range of funds all to their benchmarks. Including the obvious that not all funds have appropriate benchmarks or the difficulty in the right benchmark or index, and the difficulties of comparing apples with apples. Some funds for example also have benchmarks of fixed % return or Libor + 5% etc, some will state they don't have appropriate benchmarks, so it won't be that useful. So funds also set benchmarks to outperform their peers! Some funds in the same sector even set different benchmarks! So what you can't do is have a nice benchmark index for every single fund that facilities what you're asking for.

I also said that it was good for ideas, and to delve deeper and do further research. You need to start somewhere, and starting with 9 out of funds above average is a good place to start. Yes worth including benchmarks in that research where appropriate and possible. I totally agree with you and I do. But it's not the be all and end all just one metric. Not necessarily always more important either

For the simpler better known and researched markets what you'll find is there is a close correlation between the average sector markets and the relevant benchmark index. You have the charting tools try it for yourself. Intuitively you also know some of the answers.

Through doing so you'll also understand which markets fund managers (by average UT sector performance) outperform a basic index and which don't, and which doesn't seem the effort. Again a very useful tool

I like doing this:

eg take Marlborough UK Microcap, and plot the UK UT Smaller company sector (peers) and say FTSE All small index. What you see is that UK smaller companies sector (peers) is a sector that can and does add value and beat the index. In turn Marlborough beats it peers. So now you have all 3: fund, peers and benchmark.

Hence for an informed investor you don't necessarily need to quote a benchmark in some cases either. You know that small caps are a sector as a whole funds add value. Hence if it beats peers, it is very likely to have beat benchmark too. Hence why I can state that the theory you mentioned is possible but statistically very unilkey and close to zero,

another example would be say take your favourite UK income fund vs UK income sector vs say FTSE dividend+ index. What you find here is that UK income as a sector very closely matches/ correlates with the FTSE dividend+ index. So you know this is a sector as a whole fund managers don't add as much value as smaller companies. and the average of the UT sector is in line with an appropriate index. You also know if your fund therefore beats the sector it will likely beat the market. (BTW index selection is key here. FTSE 100 alone is not suitable nor is FTSE 250 alone, a combination is better as most income payers come from these, but dividend+ is maybe a better one)

and so on....

Having done this time and again over the years there is a very strong correlation between sector and index performance. You learn sectors that add value (like small company) and sectors that don't (like US equity). Hence you know some sectors are over and some are under, and often than simply close to each other. So while benchmarks would have been nice, I can fill in many of the gaps anyway.

In summary with the number of funds T.Rowe has and the wide range, and having regularly analysed this type of thing, I'd say the theory that it is possible for all of them to have underperformed benchmark, but it is statistically improbable and chances almost zero. Same way as the opposite.

So almost 9 out of 10 compared to peers is a very good start, as someone who regularly analyses this would know.

(BTW it is possible for a small fund manager with a small number of funds in a narrow/ specialised market to fit your theory, but not for a large wide range across broad markets for T. Rowe)

So, I'd re-iterate it's a very good starting point. Based on an understanding of funds vs peers vs benchmarks even though not included in this particular report. Benchmarks are good additional info where available, but just another metric, and none is perfect. Will increase your chances of above average returns though (depending on what you define as average )

Cheers

Fletch

Edited December 20, 2014 by fletchsmile

[fletchsmile]

88% of all of T. Rowe's funds landed in the top half of their respective Morningstar Categories for the 10-year period through November

That's hardly a ringing endorsement of the group, and illustrates a persistent problem with ranking of funds: the ranking businesses ranks funds against their peers, not in absolute terms. It would be perfectly possible for every single fund to have underperformed an appropriate benchmark yet produced the same statistic. What would have been much more interesting would have been the percentage of funds which beat their benchmark (after costs) for the same period. I suspect it would have been rather less than 88%.

Don't forget you would also eliminate automatically the 12% dogs, when filtering and researching. For me if a fund has significantly under performed its peers there would have to be a very good reason to bother looking at it. It most cases not worth the effort, and just eliminate it there an then.

So your starting sample total population when picking for further research and analysis (including benchmarks) would be all the funds that did beat their peers. That 88% becomes your 100% of the funds you are prepared to start choosing from.

So what is more relevant is what proportion of that 88% not of all funds. i.e If there were 100 funds you would only make your preferred choices from 88, not the original 100. That analysis already shifts the game a bit in your direction

BTW I can't think of many fund managers that have 88% vs peers off the top of my head. Can you?

Edited December 20, 2014 by fletchsmile

[fletchsmile]

Some thoughts from trust net on Russia. Caught my eye, as his losses were similar to mine

Have to click over the 3 short pages, though, don't know why they can't put it one one

http://www.trustnet.com/News/572561/the-fund-that-lost-me-26-in-a-week-%E2%80%93-but-ive-just-bought-more/1/1/

Key phrases:

- long term

- small part of your portfolio

- not suggesting bottomed yet but better too early than too late

- small weighting. selling at this point would be a mistake

- long term hold if you can put up with short term losses. hold your nerve

- Armageddon already priced in

Cheers

Fletch

[fletchsmile]

.. double post

Edited December 20, 2014 by fletchsmile

[AyG]

So, I'd re-iterate it's a very good starting point.

I agree. The approach of looking at sector rankings is a good starting point. However, using it to characterise a fund management house is surely a little pointless. I'm never going to choose a fund just because the fund management house does a pretty good job relative to its peers for some or most of its funds.

For me, the primary decision is asset allocation. If I want to invest in a particular sector, I'll look at the top ranked funds over various time periods being completely agnostic with respect to the fund management house's name. I'll then compare performance against a comparable ETF (where available) which is effectively equivalent to comparing the performance to a benchmark, and also look at closed ended fund alternatives.

After that the hard work begins trying to understand the fund manager's approach and why it works (or doesn't work) in different market conditions, and try to determine whether the fund manager's style today is the same as it was 5 or 10 years ago or whether it has drifted (perhaps as the fund has grown in size and become less nimble).

[fletchsmile]

From time to time the question of US domiciled investments comes up, for non-US residents. It's important for such people to have a W8BEN in place to ensure you get 15% WHT deducted instead of the standard 30% if you're tax resident in say Thailand, or UK, or Australia or...

Below are a few comments for future use...

Cheers

Fletch

------------------------------------------------------------------------------------------------------

1) Links from my UK stockbroker, which says:

Please note, before you can buy shares listed in America through Hargreaves Lansdown you must complete a W-8BEN form. This form enables residents of the UK and other eligible countries to pay reduced rates of tax on income from their US and Canadian shares

http://www.hl.co.uk/...dealing-service

Eligible countries Australia Lithuania Austria Luxembourg Bangladesh Malta Barbados Mexico Belgium Morocco Bulgaria Netherlands China New Zealand Cyprus Norway Czech Republic Poland Denmark Portugal Egypt Romania Estonia Russia Finland Slovakia France Slovenia Germany South Africa Hungary Spain Iceland Sri Lanka Indonesia Sweden Ireland Switzerland Italy Thailand Jamaica Ukraine Japan United Kingdom Kazakhstan Venezuela Korea, Republic of Latvia

http://www.hl.co.uk/...gible-countries

2) Link from Standard Chartered Singapore website, which says:

"If you would like to claim tax treaty benefit and there is a tax treaty between your country of residence and US IRS, please input your country of residence here.

If there is no tax treaty, please leave as blank.

For example, for Singapore resident, since there is no tax treaty, please leave blank. For clarity, please check on US IRS website."

https://www.sc.com/s..._completion.pdf

{Note from me} The relevant US IRS publication is IRS Publication 515, shows the 15% rate for Australia, UK and Thailand on pages 39 - 41

http://www.irs.gov/p...rs-pdf/p515.pdf

http://www.irs.gov/p.../p515/ar02.html

3) Charles Schwabb - HK broker also have this info

http://www.schwab.co...reign_investors

Edited January 2, 2015 by fletchsmile

[fletchsmile]

Just reviewing my 2014 performance. Overall a reasonable year.

Thailand was a nice core element of my portfolio, and Asia generally did pretty well, although December was a bit of a rocky month and reigned in some of the performance. Thai equities are always going to be important to me, living in Thailand, and always going to be a higher % than if I didn't live here. For anyone looking long term equities are always worth considering, and if in Thailand makes sense to have THB assets

UK was pretty mediocre. I still keep a reasonable exposure where I came from, just in case I need to go back, it's good to have GBP assets.

I was quite surprised to see my US investments up there. Don't hold much US equities, as structurally being a UK resident living in Thailand they're not of much interest. US equities also still look overvalued to me. At some point I expect a correction there, but I'll still keep some for diversification.

China finished surprisingly strongly given the slowing economy, and a good reminder that just because the economy is going one way, doesn't necessarily mean the stock market will go in the same direction

Anything to do with commodities/ resources I held took a beating. Again to be diversifed I'll continue to hold.

Was pleased with my TFEX trading: SET50 futures and options. Nice profit there - up about 4x the actual SET50 index. Nice to be able to make money in falling as well as rising markets. December was also quite nice because of the volatilty. I did have a bit of a rethink on limits I set myself given the 9% index drop in a day, and 14% in futures. So learnt/ experienced a bit there too which should make me better at trading in future.

Also met most of my objectives, including:

- increasing my exposure to fixed income as I get older - now around 10%

- adding more to property - I like Singapore REITs and their yields

- building more cash reserves

- maximising tax relief on LTFs and RMFs

Cheers

Fletch

[fletchsmile]

Anyone any thoughts on where they see themselves investing in 2015, or particular markets to focus on?

I've just about set my main objectives, but haven't yet given as much thought to particular new investments

Cheers

Fletch

[fletchsmile]

Seems to be a year where I'm not particularly in a rush to invest Having took stock of 2014 and how that fared - a decent year - the next thing was to set out where I want to be at the end of this year. So as usual I've set some specific financial targets in monetary amounts, type of investments, time frames etc. Always a good way to focus, and if you fail to plan then you might as well plan to fail

For overall direction, I'm still looking more for wealth protection for me and the wife, whereas wealth creation for the kids. A lot is similar to last year. So (leaving out the amounts) here are my objectives for 2015:

1. Maximise my LTF investments for tax benefit. Still can't beat this as an investment, with the government kindly giving me money back since 2004. each THB 100k can effectively cost as little as THB 65k net, depending on your tax rate. So a 50%+ instant gain, for tying it away for 5 calendar years, which I would have been happy to do and plan anyway. Plus THB assets are important living here, and equities should grow long term to exceed inflation.

2. Maximise RMFs. Not new money, just sell existing funds, and buy similar ones to get the tax benefits. Same tax relief as LTFS just tied up for a bit longer. Last year I split equally between: Thai equities, Asian equities, Global Fixed Income and Gold. Simply selling a fund and buying a similar version with the proceeds that has an RMF wrapper, so I get tax relief:

Aberdeen Smart Capital - Thai equities

Aberdeen Asia Pacific - Asian equities

Krungrsi Gold ETF

KTAM (global) Bond RMF

3. Streamline my investments. I hold in 3 main places: UK, Thailand, and Singapore. Where I came from (in case need to go back)+ where I am + offshore. I plan on continuing with all 3, just I want to simplify them. While I can manage them, they increasingly take up more time, plus I also do for my mum in UK, brother and sister in law, and one of their children. Plus if anything happened to me, wouldn't be easy for the wife to manage

4. Spend less time on investments and money. More time with the family. There's a good chance I'm past the half way stage in life

5. Revise our wills. So I have 3: UK, Singapore, Thailand. My wife has 2: Thailand and Singapore

6. Increase our exposure to fixed interest/ bonds. Still only around 10%. Needs increasing from my 100% equities in younger days. Would like to move towards about 15%. But this will be a challenge as 1) yields on fixed income aren't that attractive, particularly knowing rate rises will come at some point; and 2) my equities tend to return more and grow faster, so it's a bit of an uphill struggle there too

7. Reduce our weighting on Thailand equities. I still want a reasonable exposure there. Just I have more than I'd prefer - almost 40%. Partly as a result of good returns in Thai equities since 1998, but partly because in this environment if I sell there still aren't that many attractive THB asset classes. Cash rates poor. THB bonds unattractive. Property = hassle

8. Increase weightings to property and REITs - to diversify more from equities, bonds, cash etc. This will be one of the easier ones. Singapore REITS look attractive, still getting 6% - ish yields tax free with potential capital upside, and in SGD

9. Buy a few more income yielding assets in Thailand.

10. Buy some of the Krungrsi Global Income/ JPM Global Income fund in the wife's name, to dip our toes into. It's well diversified across major asset classes, and it's the type of thing she could hold for 30 years+ even if something happened to me. Auto-redemption of units could create say 3.3% redemption per year for 30 years, with capital growth.

11. For the kids just keep buying the same amount every month in funds, mainly equity funds, to hold until they're at least 18. So still at least 10 years or so away. I started doing this a shortly after the birth of our first daughter, and at the same time started the same amount/funds in my name in anticipation of the second one when she came along a couple of years later. Then just swapped the names to hers when the second finally came along. That was around 8 years+ ago. So they both have a reasonable sum in their names, and the same amounts to be fair.

12. Make sure by the end of the year, I've enough cash set aside specifically for a new car. Again I just stick the same amount away in cash each month. Use the girls names by me, to spread the risk about and put it in Stan Charte eSavers earning 2.5% instant access. Always a competitive rate, so I don't have to bother chopping and changing.

Anyway, that's a little where I'm coming from. Anyone any thoughts to share on additional objectives?

Next thing, with the past assessed, and targets set is specific investments to get there

Cheers

Fletch

[BlackJack]

So many forget number 5. Thanks for reminding them all.

[AyG]

Something I've learned over the last few decades (sometimes the hard way) is that just because an asset class exists I don't need to invest in it. So, when I see your #6 I ask myself "why"? Personally I see no reason to invest in conventional bonds. The upside is limited (unlike equities), but the potential downside is great. It used to be argued that they were a good diversifier away from equities. Recent years' experience suggests that may no longer be true.

I'm not totally against bonds. I do see a place for index linked bonds (GBP, USD, SGD) as a rational hedge against inflation. But government and corporate, no. (Junk being a double no.) It's been a pleasant surprise to see how index linked bonds have performed in a relatively low inflation environment. For example, my iShares GBP Index Linked Gilts (INXG) was up just over 19% last year (total return).

For me, it's infrastructure funds that perform a bond-like role in my portfolio. I hold Lazard Global Listed Infrastructure (2% yield, total return 18.9% last year) and First State Global Listed Infrastructure (yield 2.4%, total return 19.3% last year). It's just a pity that closed ended funds are trading at significant premiums at the moment. Physical property funds are also good in that respect. However, I've really failed to find what I'm looking for in that sector with respect to Asia. I certainly don't like the look of any of the Thai property funds.

For me, the most important thing in 2015 is going to be to get to grips with the new Thai inheritance tax and gift tax laws. These laws discriminate horribly against unmarried and same sex couples, the infertile and their adopted children, grandchildren, nieces and nephews. I need to find a way to pass on my money to those I care about in Thailand tax free.

[fletchsmile]

I guess it comes down to what you're trying to achieve. Also what your circumstances are, age etc. I've never really been a bond fan either to be honest.

#6 was driven mainly by the 2008 crisis. That year my investment portfolio was negative by over 30%. The asset classes that made positive returns for me were: commodities, some absolute/strategic funds and certain bond funds. These were less than 5% of my portfolio. Hence the interest in increasing all of these classes now, and learning from it given my different circumstances. Equities and property based investments I had fared worst. At the stage I was married with one young baby not yet in school, and in a well paying expat job. Return of capital was suddenly important, but no major liabilities or school fees yet.

1997 Asian crisis, I was living a single life with no dependents. Most of my money was in equity based investments with some cash. No property, almost no fixed income (only in mixed funds), no commodities, good job. Plenty of years ahead of me. I really didn't care about ups and downs in the market, as I'd just add and invest each month for the long term future. Just wanted to maximise long term gains, and ignore volatility. Return on capital most important. Was familiar with portfolio threory, CAPM, efficient market frontier and all that theory. Wasn't so bothered with fixed income to reduce risk, because it also reduced return.

1987 crash. Single no dependents, mainly equities, a little cash. Best earning years ahead of me. Anything I lost I could make up later in life. Long term return most important, and equities provided that. Not as familiar with the benefits of other asset classes, and as they often offered less return didn't catch my interest either.

2008 was also an interesting one for cash. Prior to that interest rates were decent, and I never had to think much about bank collapses. Then when you realise that western banks could have collapsed +even the highest grade sovereigns weren't fool proof + equities did collapse + property based investments collapsed, then corporate bonds did look nice, as did cash in Thai banks.

eg if your UK or US government goes bust, likely your deposit guarantees on cash do too, property prices tank, equities tank and contagion, gold would obviously be good, but I'd also prefer a claim on a decent corporate bond than an insolvent sovereign bond exposure who was guaranteeing my cash as well. There'll be other scenarios and crises which hit different asset classes in different ways.

Some of the other experiences I've had since 2008 include:

- managing portfolios where you are no longer adding to them and drawing money out. Optimising survival chances plus actually withdrawals to fund living is a different ball game to having more than enough or keep adding to investments. Portfolio theory made more sense on that score compared to a newly qualified accountant decades ago who knew the theory, just didn't care, was always adding money and more interested in returns. You sort of have to go through life's experiences to really fully appreciate the theories and their flaws, and we all have different experiences in life.

- finishing work with a family in tow and school fees, and considering that you may/may not work again

- various thoughts on mortality for various reasons

So all in all now, for me my perspectives, aims, outlooks and life experiences have changed. I want a portfolio that is well balanced, that will cover as many eventualities as possible. Able to live off it and draw money indefinitely if needed. Optimising rather than maximising returns. Wife + 2 kids to think of, 14 years until school/university fees over, and knowing I have more working years behind me than ahead even if I wanted to.

While sometimes I might have skipped one asset class or more, what I find is each crisis can be different and affect me in different ways. It's also sod's law that when the next crisis hits, the asset class I miss will be the one I need most. You never know exactly which crisis will hit exactly when and in exactly what way for impacts

So while I'm still not a great fan of bonds, they have their place. Some behave more like equity and can be correlated, some much less correlated. Generally lower returns than I used to get, but less volatility and risk too. Even less of a fan of gold, but have some of that too just in case.

Cheers

Fletch

Edited January 16, 2015 by fletchsmile