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 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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