Transforming personal finance since 2011

#46 — New Fund Fact Sheet...


July 29th, 2019

By Andrew Craig

Reading time: ~ 4 minutes

If you have followed us for a while, you will hopefully be aware that we have an investment fund - the snappily named "VT PEF Global Multi-Asset Fund”.

(You can find out all about the fund, how it came about and the team behind it by reading our detailed Fund Overview document).

If you have had a chance to look at the fund in any detail – you will hopefully be aware that it basically only trades once a month.*

Our fund works this way because it keeps trading costs as low as possible and there is also evidence that doing so reduces volatility - we will never react to a big daily movement (down or up) just because that daily movement has happened. Those sorts of trades risk being driven by fear and greed.

Often when a market crashes, for example, there is a chance that it will bounce back in the days and weeks that follow. I have written about this in the past but selling out when a market does crash is very often the worst thing to do. By only trading once a month, we are reacting to longer time periods which are inherently slower moving and likely to be less volatile as a result.

Our approach is entirely formulaic and doesn’t rely on any element of human judgement - to make investment decisions at least. Human judgement is involved in lots of other ways of course – (compliance, legal, administrative, choosing the best and best value underlying investments with which to implement our strategy).

Our fund is divided into 24 ‘silos’ which give us exposure to a wide range of assets from all over the world (you can see the full list on page 21 of the Fund Overview Document. Each month on the day that we trade, we run a process across all of these silos which tells us whether to stay in each of them or switch out of them into cash or a cash equivalent to protect against a potential fall in the value of that asset.

For some time now, we have been uploading the Fund Positions that result from these moves to the Funds page of our website with a pictorial that has a traffic light system to show you what we currently hold and when we bought and sold assets such as UK or US shares or gold and so on. You can also download this as an excel spreadsheet or a pdf. (You just need to look for the header “Fund Position” if you scroll down the page a little).

From December of last year we created a separate email list for anyone who wanted to be sent details of our trades each month. People on that list may have noticed that we have not yet sent out an email this month and this is the main reason for me writing to you today. (Sign up if you want to join this list).

The reason we have not sent a July trading update email out this month is because we are replacing it with a monthly Factsheet product.

Our new Factsheet is a significant upgrade and will provide far more detail. Our decision to do this has been driven in the main by what people have asked us for in the last few months. You asked. We listened.

The new Factsheet is a two page product. The first page provides you with a bunch of useful information about the fund at a glance and you will then find details of the previous month’s trades and a very brief fund manager’s commentary from me on the second page.

We have been working on this since early June and I am hopeful that we will be able to publish our first version (covering the month of July) at some point in the next week or two as soon after the end of July as possible.

In the meantime - I did want to send this email today to our wider email list:

  1. to make everyone aware that this is why there has been no trading update email this month.
  2. to introduce our new and improved product.
  3. to offer those of you in our broader email list who have not yet signed up to receive these monthly updates on 24 of the world’s most interesting financial markets the chance to do so.

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(*) Our fund also trades if there is a greater than 5% change in the assets under management. To explain why this is: Imagine if a large investor decided to commit a significant sum to our fund that was - say - 10% of the current value of the fund. Rather than have that money sit as cash for up to a month – we would need to trade in order to allocate that money across our current positions...