This is an advert by a wealth manager…
“More than 80% of active funds don’t beat the market after fees.
The reasons for this are many and include:
– institutional pressures
– short-termism
– high fees
– undifferentiated investment approach
– index-hugging
– misaligned incentives
– etc.
Most of these reasons are unlikely, or at least challenging, to change and with the competitive threat of passive investing increasing, the future looks bleak for the vast majority of active funds.
Passive funds and ETFs offer investors a chance to avoid the duds and get a market return (less a modest fee). Some would even go as far as saying it is the holy grail of investing.
Not so fast.
Most people invest to generate a return on their long-term savings. And although 80% of active funds don’t outperform, up to 20% do. So, if there was a way to identify and invest in the funds that actually can beat the market after fees, and thereby generate a higher return over the long-term, wouldn’t you want to?
Picking funds that outperform their benchmark is complex, requires expertise, experience and access.
That is where ***** comes in.
Our Investment Committee has a rare combination of over 100 years of experience in fund management, fund selection and personal wealth planning. They are industry insiders. They have lived and breathed funds and use their decades of experience, combined with academic research to identify best-in-class funds across asset classes.
Invest on ***** and get professional level expertise and make better investment decisions.
Capital at risk.”
What do you think about this advert?
Instead, let me comment.
If the 80/20 split is correct (sounds like Pareto to me), how would you know which fund manager is in the 20% and which is in the 80%? Can you imagine all those fund managers classified in the 80% telling everyone they are in the 80% that don’t outperform? That’s an admission of failure. Who would ever employ them? No active manager will tell you they are failing. It’s actually up to you to check out. Sadly most investors never do.
It is impossible to tell the difference between 20% and 80% with rhetoric. But sadly investors do just that.
If investors ceased investing with below-average fund managers, those businesses would fail and go out of business. But it’s really hard to know. It’s why it’s hard for investors to make good decisions. Guessing doesn’t help either.
You have to learn to ask better questions. You have to be more curious. You need help.
PS, I’ve deleted the name of the fund managers as it’s not relevant.