Tearing open the covering package of one such magazine last week led to a money manager advertorial falling out of the magazine and into my lap.
It was from a global money manager that shall remain nameless.
I flicked through the pages until I found the one interesting story, “Diary of an Equities Manager”.
It detailed a day, 6am to 6pm, for an equity manager at their company.
The company actively manages their funds – buying, selling, researching and it’s fair to say guessing at what will happen next.
This was reflected in the diary; it was a day that sounded very exciting – meetings, conference calls, business lunches, company research visits and also making trades.
Excitement is one thing, but the question had to be asked – this company probably employs a small army of these managers and researchers, but what as a collective do they produce?
Put simply – not much.
Checking the performance of the company’s Australian equity funds against their stated benchmarks (ASX 200 Accumulation index), revealed their funds were trailing over one, three and five year periods.
When the market had gone up, their funds had returned less than the market and when the market had gone down, their funds had lost more than the market.
Of course the fees coming off the top didn’t help, but all those managers, researchers and company visits do cost money.
And inevitably they’re the reason those fees come off the top.
Unfortunately, if you invest in any actively managed funds you’re rarely reaping any extra reward for those fees.
This was proven again last year, with the ASX 200 Accumulation Index outperforming 60% of Australian active fund managers and that figure only increases over time.
Better than average performance isn’t hard to find, just cut out the active equity managers, their researchers, company visits and trading.
Peter Mancell is a director of Mancell Financial Group and FYG Planners AFSL/ACL 224543. This information is general in nature and readers should seek professional advice specific to their circumstances. If you want help with your financial future, we’re arguably the best financial advisor in Australia.
