NEWSFLASH…
Almost 90% of UK active managers beat the stock market.
No, I could not believe the headline, either.
But the story is TRUE, at least according to S&P Dow Jones and the Financial Times.
Yes, folks…
Forget everything you have read on the Fool during the last 17 years about active fund managers…
Their champagne-drinking, Ferrari-driving lifestyles…
Their darts-at-the-FT, monkey-with-a-pin stock-selection strategies…
And of course their big, fat charges.
The reality is…
Those boffins in the Square Mile really do know how to pick winning shares, beat the FTSE 100 and produce handsome returns for the likes of you and me.
Our superb pool of British investment talent that has thumped the French, the Americans and the Germans
Here are the amazing numbers from S&P Dow Jones.
Apparently, 89% of UK funds last year beat the market. Over the last three years, the figure is 77%. Over the last five years, the figure is 86%.
Incredible stuff, as I’m sure you’ll agree.
Especially when the same S&P studies show only…
- 17% of funds in France;
- 22% of funds in the States;
- 29% of funds in Germany;
- 38% of funds in Australia, and;
- 40% of funds in Canada…
…have outpaced their respective markets during the last three years.
Clearly it must be our superb pool of British investment talent that has thumped the French, the Americans, the Germans and the rest.
So please take a bow, Neil Woodford, Terry Smith, Harry Nimmo, Nick Train… The national anthem is playing and the gold medals are all yours.
But just a minute. Hold that applause…
Because a director of global research at S&P Dow Jones has something to say:
“However, it would be wrong to assume that UK active managers are the shining stars of the fund management industry.”
Uh oh.
And there’s more from that S&P Dow Jones director of global research…
“As the five largest companies in the FTSE 100 account for more than a quarter (27.5 per cent) of the market capitalisation of the blue-chip index, it was relatively easy for UK managers to beat the benchmark by tilting their portfolio away from these stocks”
Ah ha.
In other words, all you needed to do during the last few years was avoid mega-cap laggards such as BP, Shell, HSBC, Rio Tinto and BHP Billiton…
And YOU too could have trounced the FTSE 100 by owning a few winners in the post-crisis bull run!
So step right up and form a queue…
Because if that’s all you have to do to enjoy a successful career as a champagne-drinking, Ferrari-driving career as a City fund manager…
Then sign me up now!
What next? Ditch your tracker and buy the following…
Of course, you don’t have to dust off the pinstripe and sit the CFA programme to join Neil and the boys and earn a packet.
There are a few other options to make some money as active City investors enjoy a golden age by avoiding slowcoach mega-caps.
You could simply ditch your index tracker and then…
1) Buy the funds:
Nice and easy. I mean, everyone has been piling into the new funds from Neil and Terry of late. And you too can join them and perhaps look forward to market-beating gains for longer than most…
2) Buy the fund managers:
Alternatively, you can become a shareholder in a fund manager. Schroders for instance is the largest quoted institution and its latest results showed client money up 15%, underlying profits also up 15%, and the dividend up 50%. Clearly things are going well there.
3) Buy the fund platforms:
Or what about backing a financial services provider? One obvious possibility is Hargreaves Lansdown, which collects fees from its clients based on the size of their fund holdings… and growing portfolios meaning growing fee income. It is almost money for old rope in a bull run…
The potential for tracker-trouncing share picks from the Fool’s top UK investors
This has been a great time for 89% of UK fund managers, at least according to those S&P stats. It may not be FTSE 7,000, but the party hats must be out.
But what about the poor sods in the 11% — and unable to beat the market? No doubt they are happy waiting patiently for BP, HSBC and the rest to come good.
One day those stocks will have their day in the sun. One day, that is…
In the meantime, they could stagnate for a few more years as everybody else celebrates all the other shares enjoying massive gains elsewhere in this post-crash recovery.
They really ought to consider changing their investment approach …
And so should you, if you insist on holding a tracker or somehow keep on picking losers in what remains a firm bull market.
