Death, taxes, and costs: The biggest performance drags on Asian portfolios
12 Jun 15
Brad McCosker, head of client portfolio management at First Degree Global Asset Management, looks at the seven biggest drags on Asian investment portfolios.
Let me explain using a quote from the movie Swordfish: “Misdirection. What the eyes see and the ears hear, the mind believes.”
An adviser may be interested in talking about the benefits of the product, the bonus available this month, or the name fund managers that they are selling for, but this often comes at the expense of any detailed analysis outlining costs to clients in a way that they are able to understand.
Investors should see a breakeven analysis to understand why paying the higher costs will deliver the same or better after tax return, and it should be obvious that if there are higher costs then there should be higher top line returns to breakeven with a low cost option.
How investment information is presented may alter the decisions made. There is a significant incentive for sales people to frame information in a way that is more likely for a consumer to want to buy the product or service.
Upton Sinclair once noted: “It is difficult to get a man to understand something when his salary depends upon his not understanding it.” With finance and investments it really is a numbers game, but how those numbers are presented, and which numbers are presented, are crucial to being able to make a well-informed decision.
