Growing Capital

Some people are lucky enough to have lump sums to invest. Others have to build up their capital base through regular investment of disposable income. For many, the only chance they are likely to have of capital is their pension fund. For all such people intent on ensuring that their capital will grow robustly over the long term, the best chance of success lies in investing in the stock market.

How well or badly they will do is determined almost entirely by the manager of the fund they invest in.

And the difference in returns achieved by various managers is staggering. The central lesson is that choice of fund manager determines investment success. Choosing a fund manager is not simply a matter of studying the various league tables and picking last year's winner. Proper vetting of fund managers is more complicated than that. As an IFA specialising in investments, we take three aspects of a fund manager into account:

1. The qualifications, experience and stability of the management team and the basis for their remuneration.
2. The understandability and intellectual robustness of the investment process they apply as well as the consistency with which they apply it through time.
3. The past performance of the management team. Here we look for consistent annual appearance in the top 25% of the fund managers in a given fund universe and explanations for any absences from the top quartile.

This rigorous process of manager vetting is the main part of the added value we offer clients who do not have the time, the inclination or the expertise to do the job for themselves. The process benefits lump-sum investors, regular plan investors and pension contributors. Nothing an IFA can do for a client is of more value than intelligent selection of managers who deliver superior performance.

Back

Forward