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Robleo - LGGG is a global equity tracker ETF from Legal & General. Its make up, and consequently performance, is pretty much identical to the L&G International Index trust.
I use it as it helps to reduce platform costs with HL.
. . . today.
I've held LGEN in my fund & share account, Sipp and ISA for years. I've just sold my Sipp holding this morning. I'll probably sell the holding in my fund & share account after ex-div date and review my ISA holding later in the year. As somebody who invests for the long term (min 5 years +) this simply doesn't deliver over that type of timescale for me any more.
The capital has been reallocated into tracker type etfs as follows: LGGG 50%, RSGL 20%, IUQF 20% and WLDS 10%.
I'll review returns in 12 months time. My plan is to continue to reduce my exposure to dividend paying holdings. I sold both BP and Shell 12 months ago and my investment in a simple global equity tracker fund (LGGG) has outperformed both by 17.5% and 12.5% respectively.
Let's see how my decision looks in 12 months time!
. . . I can't beat 'the market' and I've been trying for years.
If 'the market' is simply the global economy then that's what's available for me to invest in. Year in and year out I try but (with the odd exception) invariably fall short. My investment here continues to fail to beat 'the market'. I'm probably at the stage where I'm accepting that I just can't do it. So, on that basis, I'm going to increase my exposure to something that just tracks 'the market' and decrease my holdings in things that I invest in that continue to underperform 'the market'
Here's an example of what I mean - LGEN 5 year total return +24%, LGGG Global equity etf +83%. Very few of my holdings beat that . . . do yours?
Getafgrip - I agree. I'm an advocate of using average annualised data over a long(ish) time horizon in order to provide a true picture of returns.
Over the last 10 years BP's average annualised return has been around 3.7% pa. I held BP for years and, although a difficult decision, sold just over 12 months ago. I didn't see anything to suggest any change in performance going forward.
A simple global equity tracker fund has delivered an average annualised return of 12.4% pa over the same period. Do the maths and look at the difference in cumulative performance over that time period . . . it's staggering!
MarkGo - I totally agree that 'time in the market' is far more important than trying to 'time the market' I'm pretty much always fully invested!
As you say, if you're invested in quality companies then over the long term you should do ok. Have you a definition of a what makes a 'quality' company?
Robleo - I've stopped trying to 2nd guess which geographies / themes / sectors etc will outperform. I'm consolidating the number of managed funds I own and increasing my exposure to simple global equity tracker funds. In that way the tracker funds will allocate capital according to geographical and sector size.
My top 5 funds by value with 5 year returns are: Fundsmith +72%, WS Blue Whale Growth +86%, Rathbone Global Opportunies +82%, L&G Global Tech +194% and L&G International Index +79%
Here's my dividend payers with 5 year returns (dividends reinvested): MRCH +43%, LGEN +28%, HHI +25%, HFEL -11%, UKW +28% and EAT +23%
I sold most of my dividend payers held in my SIPP throughout 2023. It's gone from strength to strength ever since. I've pretty much decided to sell 1 per month in my ISA so that by July I will have moved completely away from dividend payers and reinvested predominantly into Global Index Tracker funds.
I'm tired of waiting for some decent returns from my dividend payers!
I'm mulling over the idea of selling all my dividend paying holdings and simply buying a global index tracker fund which I'll draw down from as and when required.
Without exception long term performance is poor.
" . . . 4% is not great . . . "
In my opinion you shouldn't be comparing it with ' dividend yields of LGEN et al' (who else do you have in mind?) You should compare it with the total return acheived from 'LGEN et al'
Over the last 5 year period LGEN has averaged an annual total return of around 5.5% pa
Neither do it for me I'm afraid, although I continue to hold here in the faint hope that we might see some positive movement in the share price!
" . . . That fund appears to be heavily concentrated in US growth stocks . . . " - of course it is. That's where a large proportion of the global top 100 companies are listed.
" . . . you might be buying near the top of a bubble . . . " - I've no idea. However, if I'd have been put off investing in the US everytime I've heard that statement made over the years it would have hit my finances hard.
These companies produce healthy profits and have opportunity for growth. The compounding effect in reinvesting your profits into your growing business is very powerful. I wish some of my UK based holdings could do the same.
As a long term investor, who generally drip feeds into funds, whether this fund is in a 'bubble' or not is irrelevant. Do I think most of the companies in the fund will be significantly more valuable in 10 years time? Yes!
' . . . I suppose the question is, will this mini bull run continue? . . . '
As a long term investor that's of little interest to me. The fund has an average annualised 10 year return of 13.9% pa. I ask myself is there any reason to suppose a continued double digit average annualised growth rate is unlikely to occur over the next 10 years?
Johnychainlocker - thanks for highlighting the L&G Global 100 Index fund. It's probably not put forward because it's a really concentrated fund. The top 2 holdings represent 25% of the fund's value and the top 10, 50%
However, it's definately worth consideration. Thanks.
L&G International Index produces an identical performance to the Fidelity World Index fund. I move from one to the other for capital gains tax purposes. As the allowance reduces, I think it's essential to realise capital profit up to the allowance on an annual basis for holdings sitting outside an ISA or SIPP. I also transfer holdings to my wife on a regular basis in order to make use of her allowance as well.
Good luck!
Phyl - I'm similar in that LGEN is my last single dividend paying share. I've also been reducing my exposure to dividend paying assets as they all seem to underperform the rest of my portfolio.
I've sold out of Shell, BP and NCYF over the last 18 months. I've aslo reduced my holding by about 50% in - HHI, HFEL, and MRCH. Currently dividend payers are about 19% of my overall portfolio value. I plan to reduce my holding here at some point by around 30% which will further reduce my level of exposure to below 18%.
I'm sticking with my core funds, which include both Fundsmith and Blue Whale. As I've been releasing capital from my dividend payers I've been opening new positions in global tracker ETFs - LGGG, IUQF, RSGL and WLDS.
That's 'the plan'! Time will tell if it's the right one!!
" . . . as an investor I am really only interested in a good return . . ." - Define a good return. For the additional risk associated in investing in a single share in a single market I'd probably expect a better return than we seem to enjoy compared to a lower risk investment
" . . . What’s the point of a dividend if you are seeing your capital being eroded by more than the dividend payment . . . " - none!
" . . . you do understand the concept of compound interest? . . . " I do. An investment in LGEN has averaged an annual return of 5.20% pa over the last 10 years. A simple global index fund has returned 12.35% pa over the same period. You do the maths!
Tom78 - there's a lot to be said for simply investing in a low cost global equity tracker fund. My holding in Legal & General International Index has has delivered an average annualised return of 12.5% pa over the last 10 years!