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.
Investors are people to. They are susceptible to slick marketing just like everyone else. A big fund will often use their size in their marketing and associate that size with safety even if they don't directly state this. You need to remember that this is just marketing. You should never invest your money in a fund because you are told that everyone else is doing it. In marketing, this is called the bandwagon effect. You need to look at the actual fund more than anything else.
Over recent years, the UK market has seen a rise in popularity for boutique investment houses, and, given their track record of consistent positive performance, it's hardly surprising. There are many ways to classify a boutique, but generally speaking, boutique fund managers are independently-owned or employee-owned, and relatively small in size. They often invest in specialist areas of expertise, rather than attempt to be all things to all men and run funds across each and every sector.
The popularity of boutique investment managers has actually surpassed some of the big brand names in the UK. In a head-to-head competition on performance, boutiques won. Last year, the following boutiques took the top 4 spots: Rathbone, Neptune, Artemis, and Dalton. At the same time, big brand names like Standard Life and UBS fell in their rankings.
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.
Another big mistake most investors make is that they invest in a fund based on the star rankings of the fund manager. How a fund manager performed in the past is not indicative of how he will perform in the future. If the fund manager really is good, he will probably hop around from employer to employer as each offers him more money. So why buy a fund based on the reputation of the manager, with a time horizon of 15 or 20 years, when the fund manager is not likely to stick around for more than a couple of years?
Research shows that just 15% of managers have run the same fund for over six years, 43% for four to six years, and 39% for two to four years. Similarly, 80% of fund managers at the top 50 UK fund providers have left their funds in the last three years. Around 60% of managers move because of offers from competitors.
Becoming familiar with a fund is usually a bad thing. Establishing emotional connections to a fund or fund manager is the biggest reason people lose money in the stock market. The only thing that should matter is the current performance of the fund you are in. - 23211
Investors are people to. They are susceptible to slick marketing just like everyone else. A big fund will often use their size in their marketing and associate that size with safety even if they don't directly state this. You need to remember that this is just marketing. You should never invest your money in a fund because you are told that everyone else is doing it. In marketing, this is called the bandwagon effect. You need to look at the actual fund more than anything else.
Over recent years, the UK market has seen a rise in popularity for boutique investment houses, and, given their track record of consistent positive performance, it's hardly surprising. There are many ways to classify a boutique, but generally speaking, boutique fund managers are independently-owned or employee-owned, and relatively small in size. They often invest in specialist areas of expertise, rather than attempt to be all things to all men and run funds across each and every sector.
The popularity of boutique investment managers has actually surpassed some of the big brand names in the UK. In a head-to-head competition on performance, boutiques won. Last year, the following boutiques took the top 4 spots: Rathbone, Neptune, Artemis, and Dalton. At the same time, big brand names like Standard Life and UBS fell in their rankings.
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.
Another big mistake most investors make is that they invest in a fund based on the star rankings of the fund manager. How a fund manager performed in the past is not indicative of how he will perform in the future. If the fund manager really is good, he will probably hop around from employer to employer as each offers him more money. So why buy a fund based on the reputation of the manager, with a time horizon of 15 or 20 years, when the fund manager is not likely to stick around for more than a couple of years?
Research shows that just 15% of managers have run the same fund for over six years, 43% for four to six years, and 39% for two to four years. Similarly, 80% of fund managers at the top 50 UK fund providers have left their funds in the last three years. Around 60% of managers move because of offers from competitors.
Becoming familiar with a fund is usually a bad thing. Establishing emotional connections to a fund or fund manager is the biggest reason people lose money in the stock market. The only thing that should matter is the current performance of the fund you are in. - 23211
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