Picking winners is practically impossible
Friday 21 November 2008
Finding the investment product provider, the right fund, the right fund managers are all difficult jobs for any investor. “Retail investors should invest in some sort of index tracker, because even among funds that outperform, the chance of picking the wrong fund is high, according to research by Cass Business School.” Says the FT
The article went on to say "This reveals the funds that have outperformed through skill rather than good luck, or that underperformed through lack of skill rather than bad luck." Should you be investing on the basis of luck! The article continues…."The research found that over half (57 per cent) of funds that look like star performers turn out not to be"
The point of this research is to question your thinking and to help you question those advising you. There is not a computer model that has the answers, but there is ample evidence that suggests using active management, which is generally more expensive, is unlikely to provide you with the returns you expect compared to trackers or indices based investments. So base your decisions on relative probabilities. Is it likely you will benefit more from actively managed funds or more passive based options?
posted by Murray Round Wealth Management @ 11:26,
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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