I am an Independent Financial Adviser, specialising in investments, wealth management and tax planning.
I find it so unacceptable where investors have been left to fester in failing funds, either told not to worry and it will be okay, or just left to suffer their losses.So why do we allow this to happen?
For example, if we look at the IMA Absolute Returns’ Sector. Let’s start by stating absolute return has a different definition depending, manager, mandate or investment house. If we consider that Barings and Threadneedle are among the fund houses with the worst-performing absolute return funds over the past three years, with their offerings in the sector only hitting their target approximately half of the time.
But now for some of those I perceive to be the dogs of the sector…
Octopus Absolute UK Equity
The only equity fund to be in the five worst performing absolute return funds, this is a long/short fund run by David Crawford, who previously worked for Hermes and M&G. He only achieved positive returns 61% of the time, or 22 out of 36 of the 12-month rolling periods.
Threadneedle Absolute Return Bond Fund
Run by Quentin Fitzsimmons since 2005, Matthew Cobon joined as co-manager in February 2012. It invests at least two-thirds of assets in the bond sector. The fund achieved positive returns only 53% of the time, or 19 out of 36 of the 12-month rolling periods.
EFA Absolute Return Portfolio
Nigel Winter and Nigel Brekall manage this fund at Way Fund Managers as a third-party fund for discretionary firm Spixworth Asset Management. It has a mixed asset mandate. The fund achieved positive returns half of the time, or 18 out of 36 of the 12-month rolling periods.
RWC Cautious Absolute Rate & Currency Fund
Another fixed income offering, managed by two former Threadneedle absolute return managers Peter Allwright and Stuart Frost since October 2010. This fund has achieved positive returns 50%, or 18 of the past 36 of the 12-month rolling periods.
Baring Absolute Return Global Bond Fund
Barings announced at the start of the year this fund will be merged into Andrew Cole’s Multi-Asset Fund. It was previously managed by Colin Harte. This fund has achieved positive returns 44%, or 16 of the past 36 of the 12-month rolling periods.
Why Do We Believe That It Will Get Better?
I personally believe investors are looking for someone to believe, so we hope that if the fund manager has performed poorly maybe next year they will do better.
The truth of the matter is if they have made bad decisions on a regular basis, this will continue – so just waiting for better results could well be the worst decision.
Always remember that perceived poor performance is not a simple subject – asset allocation, asset mix, selling out too soon or buying early may mean that future results would have justified more confidence. The point being look at your results and ask the question.
I know, personally I appreciate the input from clients and by constantly trying to pick the best and putting any wrong decision right at the earliest opportunity has been, and I believe is, a recipe for success.
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Tags: Collectives, Financial Planning, Investment Planning, Investment Trusts, Investments, ISAs, Mutual Funds, Pensions, portfolio investors, Retirement Planning, Wealth Management and Tax Planning
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