Journal to portfolio afterlife

portfolioafterlife · 20 Agosto 2022

Four Dutch researchers analysed the performance of more than a thousand Luxembourg- and Ireland-based equity and fixed-income UCITs (as mutual funds are known in Europe) between 2008 and 2020. Before costs, the active funds they looked slightly outperformed the passive funds. But, when fees and charges were factored in, the active funds underperformed the passive ones significantly.
In other words, actively managed UCITs are effectively priced to fail. If they reduced their fees, there COULD be a case for using them.
The problem is, of course, that fund management companies make such huge profits from active funds — especially in the retail space — that most of them just aren’t prepared to take that hit.

While the evidence does find that on average actively managed funds have stock selection skills, retail investors don’t benefit from those skills because the implementation costs exceed the alpha-generating ability. Thus, the winners in that game are the fund sponsors. The evidence is even stronger that active management is a loser’s game for fixed income investors.

Actively managed UCITs are effectively priced to fail, study shows | TEBI

Robin writes: There’s nothing wrong with active fund management in principle; the problem is, it’s just too expensive, as Larry Swedroe’s latest article explains. Four Dutch researchers analysed the performance of more than a thousand Luxembourg- and Ireland-based equity and fixed-income UCITs...

www.evidenceinvestor.com

Fund Selection: Sense and Sensibility

Simple fund-selection rules can help identify better active managers.

www.cfainstitute.org

portfolioafterlife · 20 Agosto 2022

In our book, we develop the metaphor of investing in a retirement pot as a “ ‘race’ between income, fees, inflation and growth”.

Worried about inflation? Here are two magic numbers | TEBI

Prices are rising fast. But what does that mean for investors? Jonathan Hollow highlights two magic numbers for those who are worried about inflation.

www.evidenceinvestor.com

portfolioafterlife · 20 Agosto 2022

portfolioafterlife · 20 Agosto 2022

You have to be bullish if you believe in regulation

portfolioafterlife · 20 Agosto 2022

This Q2’22 earnings season was particularly important with inflation raging in its first super-spike since the 1970s.

This table summarizes the operational and financial highlights from the GDX top 25 during Q2’22.

Thus the 8,497k ounces of gold the GDX top 25 collectively mined last quarter was a pleasant surprise. Those were the best levels since Q4’20, climbing a healthy 2.6% YoY

Ominously the GDX-top-25 gold majors’ AISCs soared 19.7% YoY to an all-time-record high of $1,281 in Q2’22

So the major gold miners’ cost situation mostly driven by volatile consumables isn’t as dire as feared in this inflation super-spike. And most of these surging variable costs including energy will eventually retreat as their supply-and-demand situations normalize. Electricity, diesel, explosives, and reagent chemicals aren’t going to keep surging forever. Supply will catch up with than exceed demand forcing prices lower.

The GDX top 25’s total revenues climbed a good 5.0% YoY to $23,834m.

Bottom-line accounting earnings really amplified those growing revenues, with the GDX top 25’s surging 24.6% YoY to $3,011m last quarter

These elite gold miners’ overall cash flows generated from operations also remained strong, just slipping 2.0% YoY last quarter to $6,209m. That’s on the high side of all totals from the last 25 quarters. If this raging inflation was heavily impacting gold miners’ operations, it would certainly filter through to lower operating cash flows.

And the overall corporate treasuries reported by these elite major gold miners actually surged 7.5% YoY at the end of Q2’22 to hit $22,880m. That not only reveals their underlying operations are healthy, it is the highest cash balance reported in the last 25 quarters and almost certainly ever

So the major gold miners are doing comparatively-well in these challenging inflationary times. Their big cash warchests will likely be used to accelerate mine expansions and buying new mines outright. That makes the smaller mid-tier and junior gold miners prime targets for majors to acquire

The bottom line is the major gold miners just reported an impressive quarter. They actually managed to grow their collective production, which is unusual at their huge operational scales. And while central banks’ raging inflation did force mining costs higher, excluding a couple tiny extreme outliers the great majority of major gold miners didn’t suffer soaring costs. They are managing these inflationary pressures quite well.