I didn't want to say I Told you So.
So as an independent reviewer of managed funds in the world, the S + P Spiva scorecard is like the bible of fund performances. They collate and compare the universe of available funds and indicate their performance against their respective index benchmarks. If you listen to the news at night, and you hear the newsreader explain that the All Ordinaries (the top 200 companies in the Australian Share market ) either rose, fell or was flat, this is the bench mark returns for the composite of all the companies in the index. S + P provide the Spiva scorecard and it is pretty harrowing for those active fund managers who pride themselves on offering returns better than the index.
Let me re-iterate my bias towards index funds management as these are predominately the vehicle we use for our clients. The reasons:
Low Cost.
Low Turnover.
Broadly diversified.
Great way to access market returns.
These passive managed investments combined with our active investment behavioural strategies provide great outcomes for our clients. Not perfect, but in my view, better than all the rest.
Have a read of this 3 page article reproduced from the Australian Financial Review (5 / 3 / 2019) so you can understand better that taking market risk is fine within a detailed financial and wealth management plan. The allocation of assets to an active portfolio of assets that vary from the market exposure does’t always mean out-performance. Even with out-performance, there is no guarantee that the fund manager will have a level of persistence to continue out-performing deep into the future.
It’s a 3 minute read at the most and offers great insights into how a market linked asset allocation can work best for your family.
