The video below reveals why more than 90 per cent of funds in major market sectors have delivered below average returns for each of the past three yearly periods - INCREDIBLY, THIS IS OFTEN THE NORM!
Yet More Research Is Published Showing Active Funds Fail To Deliver
Nine Out Of 10 Active Managers Fail To Make Average Returns
Research from BMO has found only 9.6 per cent (109) of the 1,129 funds of the 12 major market sectors delivered above average returns in each of the last three years.
This is marginally down from the 11.5 per cent of funds for the three years to the end of the previous quarter.
Of the 1,129 funds, only nine (0.8 per cent) were able to consistently deliver top quartile returns over three years.
Incredibly, seven of the 12 sectors failed to secure any top quartile funds.
This research is not alone.
Analysis from consultancy Finalytic suggests many multi-asset funds don’t provide value for money when compared to cheaper alternatives.
The consultancy reviewed 69 risk-rated multi-asset fund ranges consisting of 320 individual funds from 50 asset managers, with a total of £117bn of assets.
It found for the second year running that one fund range – Vanguard LifeStrategy – emerged as “excellent” value for money, while eleven – five more than last year – were rated good.
The remaining 57 were rated fair or poor, one less than a year ago.
In a damning quote from an article entitled The Multi-Asset Gravy Train, Finalytic said:
The sad reality is that the odds of real return for a typical investor in these funds (in excess of inflation and cash) are worse than the odds of being struck by lightning!
The Alternative To Active Funds Is Passive Funds
Such poor performance and lack of consistency among active funds is increasingly pushing investors towards the much cheaper and supposedly more consistent index trackers and other passive funds.
To discover why this is, watch this excellent programme below on passive funds, entitled Passive Investing: The Evidence the Fund Management Industry Would Prefer You Not to See.
If you're interested in learning more about passive funds, check out our resource page entitled All About Passive Funds.
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AJ Bell Is Often The Best Value SIPP For Stockmarket Assets
Over time, charges can wipe out a huge part of your fund. We like AJ Bell because there are no set-up costs. If you hold passive funds, which is our preference, or shares, investment trusts, EFTs, gilts or bonds, you pay one small fixed fee no matter how large your fund. And when you come to draw your benefits either as occasional drawdown or UFPLS payments, there's a small charge for the whole year no matter how many times you access your money (many SIPP and SSAS providers charge more than this for each payment). However, you should always compare charges in detail, because AJ Bell could be more expensive than other providers, depending on the type of stockmarket assets you hold.
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