The entire funds industry, including the Royal Commission and Productivity Commission, relies on peer comparison of fund performance, but there is no uniformity in definitions or measurement periods.
Tag Archives | investment returns
The National Seniors Australia (NSA) survey reveals that retirees want access to regular and stable income, even at the expense of lower returns. The need to preserve capital reduces tolerance of losses.
It’s much easier to measure returns than the risk involved in generating those returns. Yet, it’s crucial to understand risk because in certain markets, higher returns may simply be coming from taking more risk.
The idea that stocks should be divided into growth and yield categories diverts us from fundamentals. Intrinsic value eventually manifests in higher cash flow, whether or not share price appreciation anticipates it.
Inefficiencies in the small caps index means outperformance is common but that should not cost 60% more in fees than large caps. Large caps have outperformed small caps over the long term but with significant variability.
Sir Michael Hintze founded CQS in 1999 and it has established itself in London as a major credit-focused, global, multi-strategy asset manager with AUD20 billion under management. We chatted on his recent visit to Australia.
The active v passive debate has deflected attention from a more important issue, a focus on managing to client goals. Plus active management has suffered relative to passive by the central bank-driven uplift of all assets.
The best time to do a financial fire drill is when there is no fire. Planning for a major bear market will help prevent emotional upheaval and panic selling, and advisers have an important role to play with their clients.
It’s been a golden period for investing for those willing to take some risk. Australia has experienced six straight years when everything went up, and this has never happened before in history.
The longer the holding period, the lesser the variation of actual returns from expected ones. Using this principle should allow construction of actively-managed portfolios that outperform passive portfolios.
Nobel Laureate, Richard Thaler, believes that the irrationality of humans affects economics and financial markets, with wide-ranging implications for decision-making and investing.
The housing sector tends to go through periods of overbuilding and underbuilding, but there is evidence that the forces are currently near a balance.
Investors should know the buy/sell spreads in their funds. The purpose of the spread is to pay for the transaction costs when investors buy or sell to ensure equitable outcomes for those that remain.
Is the tax payable on your investment earnings eroding returns unnecessarily? Changes to the way fund managers invest so that tax-effects are part of the investment decision can make a meaningful difference.
Active managers on average struggle to outperform market indexes, but do they provide added protection from losses during down markets? And which index should we focus on?
There is gathering evidence that socially responsible investing (SRI) is not just about doing the right thing, but it does not detract from returns and investors who focus on it are likely to be rewarded.