NZX - NZ Exchange

[AppleCrumble]

You should really understand how a funds management business works before passing making your mind up

How does it work?

[Balance]

You should really understand how a funds management business works before passing making your mind up

Vanguard did a comprehensive study of fund managers a decade or so ago, and found that none of them outperformed the markets over the long term.

Investors end up getting the same as passive index funds, less management, performance and admin fees - typically around 3% to 5% pa !

[Anna Naum]

I think that study was not across all asset classes Balance.

[macduffy]

An interesting report by Chapman Tripp on prospects for new listings in 2015.

http://s3.documentcloud.org/document...uityreport.pdf

[JimHickey]

Vanguard did a comprehensive study of fund managers a decade or so ago, and found that none of them outperformed the markets over the long term.

Investors end up getting the same as passive index funds, less management, performance and admin fees - typically around 3% to 5% pa !

a) your point?
b) bollocks

[Balance]

I think that study was not across all asset classes Balance.

The latest study is on equities only. Have a read here.

http://www.ft.com/cms/s/0/7db9d3ee-4...#axzz3Soo4xOO9


"It’s already become a legendary piece of advice. One of the world’s greatest investors tells his adoring shareholders that when he dies, he will recommend that his widow leaves nine-tenths of the money made from a lifetime of value investing in a fund that tracks the S&P 500 index.

“I believe the long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers,” wrote Warren Buffett in his 2014 letter to shareholders.

William Sharpe, professor emeritus of finance at Stanford University and the creator of the capital asset pricing model, explained why in disarmingly simple (some would say simplistic) terms back in 1991. Investing is a zero-sum game, he reasoned, so active managers who beat the market do so only at the expense of those who do worse. The market return is the average of its participants’ returns, so the average active manager achieves the same return as the passive, before costs. Net of costs, the average result is inevitably poorer.

Others, before and after, have reached similar conclusions. “The results do not support the existence of skilled or informed mutual fund portfolio managers,” said Mark Carhart, of the University of California, of his research in 1997. “We find that mutual funds underperform the market overall,” noted Miguel Ferreira and others in 2012. “The aggregate portfolio of actively managed US equity mutual funds is close to the market portfolio, but the high costs of active management show up intact as lower returns to investors,” said Eugene Fama and Kenneth French in 2010."

[kiora]

The latest study is on equities only. Have a read here.

http://www.ft.com/cms/s/0/7db9d3ee-4...#axzz3Soo4xOO9


"It’s already become a legendary piece of advice. One of the world’s greatest investors tells his adoring shareholders that when he dies, he will recommend that his widow leaves nine-tenths of the money made from a lifetime of value investing in a fund that tracks the S&P 500 index.

“I believe the long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers,” wrote Warren Buffett in his 2014 letter to shareholders.

William Sharpe, professor emeritus of finance at Stanford University and the creator of the capital asset pricing model, explained why in disarmingly simple (some would say simplistic) terms back in 1991. Investing is a zero-sum game, he reasoned, so active managers who beat the market do so only at the expense of those who do worse. The market return is the average of its participants’ returns, so the average active manager achieves the same return as the passive, before costs. Net of costs, the average result is inevitably poorer.

Others, before and after, have reached similar conclusions. “The results do not support the existence of skilled or informed mutual fund portfolio managers,” said Mark Carhart, of the University of California, of his research in 1997. “We find that mutual funds underperform the market overall,” noted Miguel Ferreira and others in 2012. “The aggregate portfolio of actively managed US equity mutual funds is close to the market portfolio, but the high costs of active management show up intact as lower returns to investors,” said Eugene Fama and Kenneth French in 2010."

So do you do your own investing in individual shares or just invest in index funds Balance?If not why not?

[Balance]

So do you do your own investing in individual shares or just invest in index funds Balance?If not why not?

Not sure what you are actually asking!

I invest in individual shares and not with fund managers.

[kiora]

Not sure what you are actually asking!

I invest in individual shares and not with fund managers.

Well I thought you were implying the long-term results from this policy of investing in index funds will be superior to those attained by most investors – whether pension funds, institutions or individuals ???

[Poet]

Well I thought you were implying the long-term results from this policy of investing in index funds will be superior to those attained by most investors – whether pension funds, institutions or individuals ???

Surely the point that Balance is making is that if you are going to pay someone to invest for you, you may as well go for the person that charges the least because the ones that charge the most don't do any better over the long term.