| In the Netherlands there are two popular | | | | strategy, whereas the right fund uses a -- what I |
| investment funds. There is also a site -- | | | | would call a -- commercial approach; they try to |
| morningstar.nl -- where the characteristics of | | | | identify the trend (internet, commodities, etc.) and |
| funds can be compared. I've tried it for those | | | | use this as the bases of the stock selection. |
| two funds and came up with a peculiar fact, when | | | | The left-approach could be summarized as an |
| looking at the last (5 years') performance of both | | | | investment engineering approach: investing like an |
| funds: | | | | engineer, not too influenced by the market |
| - Ytd (09) -19,55% /\ -8,13% | | | | situation. Focusing on an own judgment where the |
| - 2008 -39,26% /\ -66% | | | | market could be wrong after all. |
| - 2007 -1,28% /\ 31,94% | | | | But when evaluating, there is hardly any |
| - 2006 7,52% /\ 18,1% | | | | difference in the final return of both. After five |
| - 2005 28,62% /\ 38,81% | | | | year the private investor betting on either the left |
| - 2004 5,04% /\ 5,74% | | | | or right fund is left with exactly the same amount |
| If someone would have invested 1000 euros | | | | (about 670 euros of the initial investment of |
| starting from 2004 the left fund would have | | | | 1000). |
| returned (today) 667 euros, the right fund would | | | | What would this mean for the private investor? |
| have returned 675 euros. | | | | One funds seems to go with the market flow, |
| Amazing, how small a difference! This could be | | | | the other is more stubborn in an own proprietary |
| due to the small margin the fund managers are | | | | approach. But in the end they leave the private |
| allowed to deviate from the world ... index | | | | investor with the same return... |
| benchmark. | | | | If it doesn't matter that much one could argue to |
| Yet their investment strategies are quite different. | | | | get rid of these funds and invest in index funds. It |
| The year-to-date investment loss for the left | | | | is more transparent. But for the client less |
| fund is due to their cash position of -5% which | | | | interesting they like to follow the strategy of the |
| means they are over invested. The other fund | | | | fund manager and find out that after five years it |
| has a cash position of +5%. | | | | turns out all more or less the same. |
| The left fund uses a bottom-up stock-picking | | | | |