10 questions everyone should ask their investment manager
By Cristian Angeloni, 1 Nov 19
UK wealth management boutique demystifies investing myths and investor behaviour
Click through the slides below to find out more
Professional help is, in the majority of instances, needed when it comes to selecting investment vehicles, strategies and overall performance.
Would I be better off without a professional investor?
“There are many things we need to do better as an industry. However, the answer to this question is still usually ‘No’.
“The portfolios of investors who do not work with an adviser perform, on average, about 6% per annum worse than those who do.”
Do institutional portfolios perform better than private client portfolios?
“The reason for this distinction is that institutional clients are focused on long-term evidence-based investing. They want to understand how a particular strategy operates, the environments in which it will perform, and the associated risks.
“Generally speaking, institutional quality solutions behave as they are designed to because they are underpinned by in-depth research. Retail solutions tend to be less robust, and they are often based on a manager’s instinct rather than empirical evidence.
“It is often challenging to obtain an adequate explanation of the research underlying retail products, and some retail funds expressly refuse to disclose their strategies. No institution would invest money into these types of strategies, which might occasionally perform well, but for which performance cannot be adequately explained, replicated, or predicted with any degree of certainty.
“All in all, institutional quality solutions ‘perform better’ because they’re more likely to perform as expected, even if certain retail strategies may randomly outperform over certain short-term time horizons due to luck or circumstance.”
Tags: Henderson Rowe
