Clear investment beliefs are crucial
Monday 1 March 2010
What a great article.
The discussion by Pauline Skypala of the FT is based on a study by Kees Koediijk of Tilburg University and Alfred Slager, chief investment officer of Stork Pension Funds. They found the publication of investment beliefs is concentrated in Canada, the US, the Netherlands, Australia, Denmark and Sweden, and among public pension funds…but little in the UK.
What does this mean to you as an investor?
If you are employing an adviser and fund manager to look after you assets, how can you take decisions without making your terms of reference explicit? For example, most investors tend by default to actively manage funds. Rather than invest by default, the adviser and fund manager should explain why they believe it is in your interest to do so. They need to be clear about how underlying assets are included or excluded from a portfolio. If the fund manager believes in stock picking, then that should be stated so the investor knows how the manager is making decisions on their behalf. Unless you know the terms of reference, how do you really know if you have been successful in your investment experience?
A prospective client told us they were delighted that their funds had increased by over £150,000. Great news. But in reality the return should have been over £250,000. If you know the terms of reference you can judge success.
As investors you need to ask for the investment policy statement or details of investment beliefs...and if they are not forthcoming, how can you realistically judge performance and risk over time?
posted by Murray Round Wealth Management @ 15:30,
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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