Past performance, league tables and building a squad

John Greenwood is a bit of a hero

Nobody likes looking at league tables when your team’s in the relegation zone. But I can’t get enough of the Vanarama National Conference South Football League right now.

My good friend and AgeWage investor, John Roe, manages the LGIM multi-asset-fund which is the LGIM default for its workplace pensions, it is bottom of the league, which gives the lie that there is diversity is the only free lunch. As John Greenwood tells us in the latest CAPA report, diversification has done you no favors in the last year , when it paid to be invested 100% in listed equities. John is a great bloke , a great speaker and he thinks very deeply about what he does. But I’m not sure that MAF is the right fund for people investing for the distant future.

Past performance isn’t a guide to the distant future but it’s a pretty good guide to how much money you’ve got in your pot and therefore a matter of considerably more interest than is generally given credit.

I’m no fan of performance towards the bottom of the chart even if it’s performance that comes with little risk.

I find it hard to understand NOW pensions can be deemed to have taken so much risk when it’s managed by the risk-averse Cardano, the biggest risk of investing with NOW is that you never seem to make any money on your investments. I am not c9nvinced that Smart runs money with minimal levels of risk. Lewis master trust is 100% invested in equities and is deemed medium risk – I do get returns – I don’t get risk as reported.

When I first came to pensions in the middle of eighties, people used to take these performance charts really seriously. Then the fund managers worked out that their next year’s income was being decided on them and they managed to convince us punters (and the regulators) that what they’d delivered wasn’t that important.

So the last shall be first, and the first last.

Matthew’s dictum is often taken to imply a carousel where so long as you stay on board you will end up in the same place as everyone else.  However Matthew 20 finishes

 For many are called, but few are chosen.

Which suggests that we may all measure up, but we’re accountable when we do. There will come a time when organisations that consistently sit at the bottom of the league will get relegated and those at the top , get to play in Europe ( or the National Conference if you play in Somerset).

Are big money signings needed?

It’s clear that most workplace pensions can stay mid division by avoiding taking big bets on asset allocation, currency hedging and expensive assets. But if you have ambitions to make people’s money matter, if you think you can call sterling and if you think you have the capacity to allocate tactically and win, then you could and perhaps should be ambitious.

Right now the big money signings that get you  picked by the fantasy leaguers involve allocations to productive finance. This is a bit like investing in the next Lionel Messi when he’s 15, there’s a one in ten chance he’ll turn out that way, but if he does , you have bought him at 1% of the price.

Should we be buying workplace pensions on more than the current team but on the academy. Are there ways to pick the winners in the distant future based on allocation to long-term assets?

In my view, VFM is based on what’s happened as it is football. If you are playing fantasy league you need to understand VFM based on what’s yet to come. The First Actuarial Monkey League asks you to pick teams to out and underperform in all divisions and if you get to beat all the monkeys picking at random , you are deemed skilful. Over the years I have proved pretty average but my son has played only once and won the competition. Right now he is in the top 1000 teams in the UK – he tells me that he’s putting the accomplishment on his CV (if he stays the course this season).

What’s the secret – it’s a squad thing – he tells me.  But having Salah as your captain is usually a good thing.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to Past performance, league tables and building a squad

  1. John Mather says:

    Do we have to suffer meaningless chants…such as

    “Past performance isn’t a guide to the distant future”…

    “unit prices can fall as well as plummet”

    The members want to know what is a guide to preserving the buying power of savings and what does make your money work as hard as you do.

    The conclusion may be that money is working as hard and that lazy people and lazy assets produce lazy returns.

    This week I was asked to comment on a portfolio diversification…$240,000 spread over 76 funds. Clearly betting on every horse in the race and only loosing 30% year to date. A chimp might have done better.

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