Simplicity versus performance - can investors trust what they don't understand?
Tuesday, 5 May 2009
Investors should be able to trust a complex fund as they do a high performance car, according to Tim Haywood, chief executive of Augustus Asset Managers which manages the Julius Baer Absolute Return Bond fund range among others.
Haywood argues that designing funds simple enough for lay investors to understand, like building a car suitable for weekend tinkerers, will have a negative impact on performance.
In theory, trusting the manager to deliver is important but how many fund managers actually have delivered to earn the trust they are asking for?
In reality few managers ever beat the market returns, that means investors are likely to be overpaying for a fund manager that does not consistently outperform. Anyone remember Bernie Madoff..he asked people to trust him...
In our view investments do not need to be complicated to be successful. If investment managers are keen to promote a sophisticated product, perhaps you should leave it for someone else to buy.
posted by Murray Round Wealth Management @ 15:59,
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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