Funds take half your growth in fees
Monday 30 July 2007
I found this article a couple of years ago and kept it to help clients understand some of the costs when investing. It was written by Kathryn Cooper of The Sunday Times on October 10, 2004. Click here for the full story
Now that we have our blog, I thought it should be exposed once again. The key issue is thinking about what added value do your fund managers or stockbrokers offer?
Kathryn Cooper writes " Investors in Britain’s most popular funds have lost up to half their growth in charges over the past 10 years. A survey of 20 of the country’s best-known UK growth funds, in which savers have invested a total of £9 billion, reveals that only three have managed to beat the market over the past decade because of the impact of high fees. Julian Penniston-Hill of Intelligent Money, which conducted the survey, said: “A staggering 85% of the most popular funds — and 80% of all UK schemes — have lagged the index over the past decade because of the devastating impact of fees and dire performance"
It is our view, unless these fund managers can consistently outperform the market, why employ them? Of course many investors may believe their fund manger does outperform. That may be the case but how did they do it, if you do not know, how can you be sure they will replicate performance. Furthermore, it is not always appropriate to compare themselves against some indices as they do not offer a fair comparison. Unfortunately as the statistics show, most of these managers generally fail to capture alpha. What is alpha?
There is no doubt that some managers do outperform, but with thousands of funds from which to choose, how can you predict in advance which funds are the winners? If you have a secret way of doing so, let me know.
Categories: Fees, Active Funds
posted by Murray Round Wealth Management @ 21:42,
The key to investment success is looking for haystacks…not needles
Friday 20 July 2007
Successful Wealth Management comes from diversifying, keeping costs down, turnover low and by introducing asset allocation strategies. This has been proven to be the best way to capture and compound value…and it is available at Murray Round Wealth Management.
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We expose the truth behind investment products, the speculation game, the hidden costs and marketing hype and concentrate on what really matters, transparency and effectiveness of your investments. After tasting ‘The Truth Serum’ you will understand how markets truly work and it will all seem common sense and logical or as we like to say, “Successful investors look for haystacks not needles”.
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Categories: Asset Class Management, Wealth Management
posted by Murray Round Wealth Management @ 16:24,
Asset Class Investing.. the study by Brinson, Hood and Beebower in the Financial Analysts Journal in 1986 "Determinants of Portfolio Performance"
Tuesday 17 July 2007
The main asset classes available to investors, in order of risk, are cash, property, bonds (also known as fixed interest securities), shares and alternative investments such as commodities and private equity.
Several studies have concluded that the combination of asset classes in a portfolio is the single most important factor in determining the investment performance of that portfolio and thus should be the starting point of the investment planning process.
Brinson, Hood and Beebower in the Financial Analysts Journal in 1986 entitled "Determinants of Portfolio Performance" suggested that well over 90% of the variation in investment performance of US pension plans could be explained by differences in asset allocation and this is supported by subsequent research studies that have reached similar conclusions.
Sources: Brinson, Hood, Beebower 1986, Ibbotson & Associates 2002
Interested to know more. See ”Investment Policy Explains All". Click here. This academic paper revisits the Brinson, Hood, Beebower 1986 paper with similar conclusions. In fact, the paper goes on the say” Critics of this concept would say that surely manager selection must account for something. Managers must be important. Our data, and the common sense wisdom of Dr. William F. Sharpe, suggest otherwise. Manager selection matters, but not to any great extent."
Categories:Asset Class Management, Research
posted by Murray Round Wealth Management @ 13:49,
Bear Stearns spares blushes by reassigning assets chief
Tuesday 3 July 2007
"Bear Stearns has replaced Richard Marin, its head of asset management, in an attempt to restore investor confidence as two of its hedge funds stand on the brink of collapse."
Tom Bawden in New York The Times Saturday June 30 2007 Full story here
Its a funny thing, the more I read about Hedge Funds, the more I am not surprised by these events. But the question that must be asked why do investors time and time again invest their money? Common sense says look before you leap...but investors keep leaping! Maybe investment into hedge funds should be called gambling or speculating into hedge funds. It will not stop the speculation but it may just help put into perspective the risks.
So if you are an investor, think seriously about the risks. If you are a gambler, I wish you luck or perhaps you should consider the races instead...
I await the future news of Hedge Fund failures..when will it be?
Categories: Hedge Funds
posted by Murray Round Wealth Management @ 20:09,
The Authors
Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
Kirsty
Kirsty is our communication guru. Managing information requires considerable due diligence and her passion for organisation gives the clarity we all seek. From Shropshire, with a Psychology Degree and much travelling, she is now back in Shrewsbury...and London often, keeping us all at Murray Round focused.
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