Larger Is Not Necessarily Better When It Comes To Managing Your Money
A bigger fund does not mean that it is better. If you pick a fund just because of its size, you can lose a lot of money because you will always be arriving to the party late.
Many investors are deluded into thinking that buying from a big brand fund manager will in some way protect them against selecting a poorly performing fund. The big brand managers offer many great funds, but they're also marketing plenty of duds. Just because one fund is a top performer, doesn't mean it applies across that fund manager's range. Investors need to look beyond the brand and more closely at the underlying fund.
In the UK a new kind of fund manager has popped up called boutique investment houses. These are very small companies that specialize in only a few industries. They are specialists in a very small niche within a given economy. Boutique investment houses do not try and be all things to all people. They could care less about being able to offer an investment in all sectors of the economy.
Recently, boutiques have even been stepping on large firms' toes when it comes to servicing retail clients. Last year boutiques outshone their larger counterparts in the UK, taking the top four places in the 'best overall fund manager rankings'. Big brands such as UBS and Standard Life slipped down the rankings, while boutiques Rathbone, Neptune, Dalton and Artemis took the top spots.
The last quarter of 2006, when the economy first turned down, investors were wiped out. But even during this rapid reversal of fortunes, boutique investment houses outperformed their larger competitors.
Unfortunately most investors have never heard of these smaller investment houses and hence are missing out on a great investment opportunity.
In addition to people investing in a fund because of the company that manages the fund, another huge mistake is to invest in a fund because of the fund manager. Many investors are so ignorant about investing that they look at a fund managers star rankings and invest in a fund based on that alone. How a fund manager did 2 years ago has absolutely nothing to do with how he will perform next year!
Only 15% of fund managers stay at the same fund for 7 years. A study of the top 50 UK fund providers show that about 75% of fund managers left their fund in the last 4 years. Most of them move to different funds because of offers from competitors. You can not invest in a fund for 10 years or more based on the fund manager when statistics show that fund managers only stay at a fund for 7 years.
In investment terms, familiarity does not always necessarily breed content. Investors should monitor their investments very closely and ensure that they have the tools at hand to spot strong investment opportunities that would otherwise pass them by. - 23210
Many investors are deluded into thinking that buying from a big brand fund manager will in some way protect them against selecting a poorly performing fund. The big brand managers offer many great funds, but they're also marketing plenty of duds. Just because one fund is a top performer, doesn't mean it applies across that fund manager's range. Investors need to look beyond the brand and more closely at the underlying fund.
In the UK a new kind of fund manager has popped up called boutique investment houses. These are very small companies that specialize in only a few industries. They are specialists in a very small niche within a given economy. Boutique investment houses do not try and be all things to all people. They could care less about being able to offer an investment in all sectors of the economy.
Recently, boutiques have even been stepping on large firms' toes when it comes to servicing retail clients. Last year boutiques outshone their larger counterparts in the UK, taking the top four places in the 'best overall fund manager rankings'. Big brands such as UBS and Standard Life slipped down the rankings, while boutiques Rathbone, Neptune, Dalton and Artemis took the top spots.
The last quarter of 2006, when the economy first turned down, investors were wiped out. But even during this rapid reversal of fortunes, boutique investment houses outperformed their larger competitors.
Unfortunately most investors have never heard of these smaller investment houses and hence are missing out on a great investment opportunity.
In addition to people investing in a fund because of the company that manages the fund, another huge mistake is to invest in a fund because of the fund manager. Many investors are so ignorant about investing that they look at a fund managers star rankings and invest in a fund based on that alone. How a fund manager did 2 years ago has absolutely nothing to do with how he will perform next year!
Only 15% of fund managers stay at the same fund for 7 years. A study of the top 50 UK fund providers show that about 75% of fund managers left their fund in the last 4 years. Most of them move to different funds because of offers from competitors. You can not invest in a fund for 10 years or more based on the fund manager when statistics show that fund managers only stay at a fund for 7 years.
In investment terms, familiarity does not always necessarily breed content. Investors should monitor their investments very closely and ensure that they have the tools at hand to spot strong investment opportunities that would otherwise pass them by. - 23210
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