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Thank you for your support in 2014 and we look forward to working with you further in the New Year.
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This Daily Telegraph article quotes from the director of the Pensions Institute, David Blake, who says “Based on the findings, just 1pc of fund managers are 'stars’ who are able to generate superior performance in excess of operating and trading costs. But they extract all of this for themselves via fees, leaving nothing for investors. A typical investor would be 1.4pc a year better off by switching to a low-cost passive UK equity tracker.”
These conclusions are consistent with decades of academic research in the field of finance and are consistent with the philosophy we apply when helping clients make good decisions with their investment capital.
In summary, there is no need to take the risk of concentrated security positions nor gamble with attempts to time an optimum entry or exit point with shares, bonds or currency. Neither is there any benefit in paying a fund manager to take these risks for you. Over time, the market will reward those who take measured market risk appropriate to their individual objectives and circumstances, then diversify by region, asset class and security numbers to mitigate all unnecessary risks. Easier said than done, but then that’s where we can help…
This article provides useful insight on what happens if you are in the market for the best days and out for the worst… It’s a nice idea. However, the reality is that people usually end up doing much more damage to their long-term wealth by trying to time the market, as Philip Baker of the Australian Financial Review explains.
The July to September quarter demonstrated yet again why diversification is such a successful tool for long term investing. The third quarter of 2014 saw portfolio investors enjoy their fifth positive quarter in a row, and in each quarter this year (from a New Zealand investor perspective) we have seen a different asset class leading the way.
In January to March, New Zealand equities was the best performing asset class; over the second quarter, local and international property assumed the top spot; in the recent quarter it was the turn of unhedged international and emerging market equities.
Why did unhedged equities in particular do well? Primarily because, following a sustained period of strength, the value of the New Zealand dollar finally weakened - particularly against the US dollar - over the quarter.
