Saturday, 26 March 2016

[Interview] Why active managers destroy value

A friend passed this article on to me. It is an interview with Charely Ellis by Robin Powell from the Evidence-Based Investor blog. Robin introduces Charley as follows:

For me, Charley Ellis is one of the investing world’s great consumer champions. In the mid-1970s, he became the first industry insider to acknowledge that most active fund managers fail to beat their benchmarks and that investors are far better off using low-cost index funds instead. His central argument was that the rarity of consistent outperformance combined with the significant long-term impact of fees and charges meant that active investing was, to use his own phrase, a loser’s game.
I recently caught up with Charley at a Financial Market History Workshop hosted by the Newton Centre for Endowment Asset management in Cambridge and found that, 40 years on, he believes the case for using actively managed funds is weaker than ever before.
He has nothing against fund managers, most of whom he says are “extraordinarily talented.. and wonderful people”. The problem, he says, is that there are now so many talented managers out there that it’s become almost impossible – even for the very brightest – to outperform their peers with any degree of persistence.
It is an interview worth reading and I concur with Robin's last point in the introduction above regarding “extraordinarily talented.. and wonderful people”. Not for one second do I believe that the average active manager is not very smart. I believe the opposite just like Charely Ellis. Where our views diverge is that I believe some form of active management is useful. This is a strategy that focuses on building a growing income stream with little to no trading of securities. To be fair, this approach is closer to a passive strategy than an active one. Shall we settle on semi-active? :).

(Side note: for those who are wondering what active vs passive is, then see this article by clicking here.)

The interview can be found by clicking here (opens in new window and takes you to Evidence-Based Investor site).

Tuesday, 22 March 2016

[Table] Dividends over last 12 months

This first post is a post to illustrate what is to come. I have created a table of equities I track. Each equity has dividend growth over the last 12 month period. There are two numbers.

The first number is the total 12 months growth in full-year dividends per share. (i.e. (Final DPS + Interim DPS) / (Last Year Final DPS + Last Year Interim DPS)).

The second number is the last declared DPS over the DPS declared 12 months ago. It could be (Final DPS / Last Year Final DPS) OR (Interim DPS / Last Year Interim DPS)

I also show the announcement date and whether the growth has beaten Long Term South African Inflation (6%). Companies such as BTI should be forgiven for not beating SA inflation as they report in Pounds.

This table will be expanded to show a longer time period and include other information such as forward yields and dividend cover. I also plan to expand to include companies from the USA, UK and Switzerland. Eventually, I plan to have a section on the blog for each company.

If you would like to stay posted on these developments, click here to follow by email.

Finally, here is the table.

Table 1
Disclaimer: I have tried my best to ensure that Table 1 is accurate. It is based on factual data and does not contain any recommendations. Errors and Omissions are Excluded (E&OE).

Sunday, 20 March 2016

[1st Post] Welcome

Welcome to the Forget the Noise blog. I will write regularly about companies and investing.  I will also provide updates on the book, Forget the Noise.

Please check back regularly for updates or click here to follow by email.