Two interesting Fund Related articles at the Telegraph

barny_100

Apologies if this is yet another rehash of the old debate but thought the articles made it topical!

http://www.telegraph.co.uk/finance/personalfinance/investing/5093111/Fund-management-A-game-of-luck.html

http://www.telegraph.co.uk/finance/personalfinance/investing/5093100/Stock-market-investing-Are-fund-managers-heading-for-a-price-war.html

One thing I noticed in the first story:

According to Thames River research, only 10.6pc of all unit trusts and Oeics – both active and passive – have managed to outperform their respective benchmarks in each of the past three years.

But the issue is by how much? I don't that much care if a fund slightly under performs one year in 3 if in the other 2 it out performs by 10%+ do I? But by this metric that would be a red cross against the active fund. Seems like selective statistics to me.

Also:

Indeed, according to Skandia, in the 12 months to February 20, 2009, of the 502 retail IMA funds focused on UK equities, 238 failed to beat the FTSE All-Share.

It would be interesting to see the make-up of those 238. I'm not saying certain investment companies are flawless or whatever but I believe (From people on this board probably!) that the high street bank run funds are regular poor performers?

purch

of the 502 retail IMA funds focused on UK equities, 238 failed to beat the FTSE All-Share.

Or to put it another way..........

Out of 502 Funds, 264 beat the FTSE All Share :T:j:T

wriggly

I think the most interesting bit was that the good active managers achieved their outperformance by knowing when to ride their winners and to cut their losers.

That is, the selection of investments was a minor component of their outperformance, even the good managers chose badly almost 50% of the time.

It was doing the right thing whatever happened next that made all the difference.

This suggests that random stock selection, with a trailing stop-loss should do almost as well. Is anyone interested in funding me to perform further research? :rotfl: