Investment Advice – Not the Ryanair of asset management

A new sheriff has just walked into town in the form of Terry Smith of Fundsmith so the “broken” fund management industry better watch out!  He wants to build “the Ryanair of asset management” through the launch of a low cost low trading equity fund investing in around 20 global shares.

But the analogy to Ryanair doesn’t really stack up as it is not low cost – 1% per annum for a concentrated mainly buy and hold portfolio is expensive and whilst air fares vary in price I don’t suppose they vary as much as 10 or 25 times which would be the case if £100,000 or £250,000 was invested instead of £10,000. It is the same flight at the end of the day!

And all this focus on cost which I accept is a drag on performance disguises the real reason why the fund management industry is “broken” – most fund managers sell the conventional wisdom that stock picking or market timing is where most value is added when academic evidence overwhelmingly points to it being strategic asset allocation (the mix between equities, bonds, property and cash) see investment philosophy.

My financial planning and investment planning service concentrates on where most of the value lies in strategic asset allocation using low cost index tracking funds.

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