Apples and oranges…yes that’s a realistic method of comparison..isn’t it?
Tuesday 8 April 2008
It is important to be able to understand where your assets are invested so you can begin to compare. Unfortunately it is not that easy for investors.
...even the FT states “Broad fund sector classifications are making it increasingly difficult for investors to compare the performance of equity funds on a like-for-like basis.”
In an article entitled Sector revamp needed to aid fund selection By Catherine Neilan
Published: April 4 2008 the writer states ”The number of strategies, styles and philosophies contained under one heading becomes apparent when you consider how the top performers fare once there is a change in the cycle.
The IMA, the industry body, admits it has not been able to find a workable solution to make the comparisons easier for investors.
This means investors often have to carry out their own due diligence on what a fund invests in, and how risky it may be compared with its so-called peers.
Mona Patel at the IMA says the industry body has considered dividing up the larger sectors, but has so far failed to find a solution.”
This is not to say it is impossible to make fair comparisons, to compare 'like with like', 'apples with apples' so to speak, the point of the argument, is to make it easier. Yet it will never be easy simply because it is actually complicated, and investors should ask their fund managers and advisers to provide the due diligence. Which brings me back to a fundamental problem facing investors…how would an investor know to ask about due diligence? It's not the answers that are important, it’s knowing what questions to ask in the first place? Knowing these questions is part of our role…want to know what you should ask?
Categories: Benchmarking, Research, Asset Class Management
posted by Murray Round Wealth Management @ 13:56,
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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