| If you take the fact that the bulk of | | | | Low fees based on performance |
| investment managers cannot get into double | | | | |
| figures on a compound growth basis over five | | | | Wouldn't you rather know that if your |
| years and very few can out perform the stock | | | | investment manager is not making money for |
| index, then it is obvious you have to be | | | | you he is not making money for himself? |
| careful with your fund selection. | | | | |
| | | | Of course, this does not guarantee |
| This article is all about getting better | | | | performance, but at least they have |
| pensions performance and will help you | | | | confidence in their ability and this can give |
| separate out the winning funds and asset | | | | better long term returns. |
| managers from the losing ones. | | | | |
| | | | Funds under management promoted are |
| Have you ever seen a fund advertised by a | | | | representative |
| major asset manager that losses? | | | | |
| | | | As we have seen one of the tricks of the |
| We have never seen one, yet the bulk of funds | | | | major companies is merge funds, drop funds |
| don't do well, so what's going on? Let's find | | | | and launch new funds, so that they always |
| out. | | | | have a attractive product for the sales |
| | | | force. |
| Selective track records | | | | |
| | | | Many asset managers though, will give you a |
| The pensions and mutual funds industry is | | | | performance that is representative of ALL |
| sales driven so when a fund does not perform | | | | funds under management and this gives true |
| it is conveniently merged into another fund | | | | representation of their management skills. |
| or not promoted. Furthermore, many companies | | | | |
| simply start off funds with small amounts of | | | | The fact is, there are a lot of hungry small |
| money and then pick the best one to promote. | | | | managers out there, it's just a question of |
| | | | doing some research. |
| It's all selective and many investors simply | | | | |
| don't question the figures and believe the | | | | Past performance is no guarantee of future |
| sales patter of the advisor or the glossy | | | | results |
| brochure and then wonder why they end up | | | | |
| disappointed! | | | | Or maybe it is. |
| | | | |
| The best you can expect. | | | | You know the big mutual funds will not do |
| | | | well! |
| If the bulk of funds cannot beat the share | | | | |
| indexes the best thing for share investors to | | | | A bit flippant, but you can see what we mean |
| do is to simply buy index tracking funds. | | | | if you look at 5 year holding periods and |
| | | | performance figures for the major asset |
| With their low fees they are the best bet, | | | | managers as a group. |
| but if you think about it, double digit | | | | |
| performance figures are about all you can | | | | If you are looking to invest in mutual funds |
| hope for over a 5 year period. | | | | then tracking the index looks the best bet. |
| | | | |
| When you take into account inflation this is | | | | Most asset managers don't out perform it |
| hardly great growth. | | | | anyway and you get lower fees on tracking |
| | | | funds. |
| Alternatives to target 30% annual growth or | | | | |
| more | | | | Final words |
| | | | |
| You can however make bigger returns by | | | | You can also diversify and look for higher |
| seeking out managers that are innovative and | | | | gains look for the smaller innovative |
| rely on performance based fees. | | | | managers. |
| | | | |
| There are many managers who do this. | | | | They don't tend to have huge sales budgets |
| | | | and rely on performance and are prepared to |
| They may deal in alternative investments such | | | | demonstrate they have confidence by earning |
| as futures, FOREX or commodities or simply | | | | fees in this way. |
| shares and equities. The aim though is to | | | | |
| seek out an asset manger that has the | | | | Seek them out their there and you may be glad |
| following: | | | | you did. |
| | | | |