Cheap "guaranteed" pension

Pal

So, my point is this: do you think there's a way of managing investment risk through research?

Possibly, but it depends entirely on the researchers methodology and level of activity. The company that I work for has a huge manager research department across the world that has regular access to the inner workings of investment management companies, to the point that we can send representatives along to accompany investment manager researchers when they visit individual companies in which they are considering investing.

Does this level of research mean that our recommendations are perfect? No. Past performance, for what it is worth, suggests that we are correct approximately 75% of the time over five year time periods, but frankly that could be the result of random chance as much as anything else.

There is no research methodology in the world that can guarantee the future investment performance of anything: it is all about reducing the odds of failure. I have yet to be convinced that this can be achieved over any long time period by anyone, if only because both the performance of markets and the performance of investment managers is so dictated by random events.

My personal investments are in tracker funds. In the long term I may miss out on excess performance that an active manager might have given me (had I chosen the right one), but I have also reduced my overall risk by removing the active manager risk. Personally if I want to increase the level of risk I am taking in my portfolio, I would increase the proportion of equities I hold compared to bonds or cash, rather than invest the equities with active managers.

But then that is my personal choice. It may cost me money in the long term but at least it won't lose me any. It also means that I don't have to waste my time trawling through marketing hype and flawed manager research reports for the odd nugget of information that might be both true and useful.

Just in case anyone thinks I am having a go at anyone, please note that I am not. In the end all IFAs have to find a way to help people, and anything that they can do to improve the chances of someone having more money at a later date than they would have taking decisions by themselves is to be commended (and recommended to others!). Even if the person eventually loses out, if the odds were improved by them taking advice then it would have been worthwhile.

Unfortunately the fee paying public are unlikely to see it that way!

Pal

CheerfulCat - Apologies if the w-waving remark offended.

The at the end of my post was meant to denote that it was tongue in cheek.

I didn't believe for one moment that anyone was seriously attempting to ramp up a number of multi-million pound investment funds by posting on the pensions board at MSE.Com. I bet Martin would love to have enough visitors to his site for that to be a potential problem!

You will however understand that the MSE boards are not FSA registered, and so we have to be careful about any posts that appear to recommend funds or stocks. My post was merely an attempt to steer the conversation away from where it could potentially be heading, without having to start editing posts.

cheerfulcat

Pal wrote:

CheerfulCat - Apologies if the w-waving remark offended.

The at the end of my post was meant to denote that it was tongue in cheek. !!

OK. Thanks, Pal. It's just that sometimes I feel that you are out to get me :-)

I didn't believe for one moment that anyone was seriously attempting to ramp up a number of multi-million pound investment funds by posting on the pensions board at MSE.Com. I bet Martin would love to have enough visitors to his site for that to be a potential problem!

No, I didn't think that you *believed* the ramping thing; as you say, it would be hard to move a big fund. It was precisely to *avoid* even *appearing* to ramp that I offered to post the names of the shares off-board because at least one of them is small enough to be affected by bb chatter. Hence the (perhaps disproportionate) offence taken.

You will however understand that the MSE boards are not FSA registered, and so we have to be careful about any posts that appear to recommend funds or stocks. My post was merely an attempt to steer the conversation away from where it could potentially be heading, without having to start editing posts.

Fair enough.

Pal

Out to get you? Have we clashed heads before now then?

I'm never out to get anyone, except perhaps EdInvestor, but then (s)he has every right to be paranoid.

I have even edited your post to correct the quotation.

EdInvestor

Pal wrote:

Out to get you? Have we clashed heads before now then?

I'm never out to get anyone, except perhaps EdInvestor, but then (s)he has every right to be paranoid.

Hello Pal,

My personal investments are in tracker funds.

Strangely, this comment of yours doesn't make me feel paranoid :D

Pal

Did you think that it was supposed to? Perhaps you are paranoid...