Wealth Magazine asked Top 30 Under 30 to name their three favourite funds.
This is an industry magazine. Out of all the picks, there was no consensus. Let’s add some perspective. Investors are employing fund managers, of all ages (well, not children), to pick funds for their investors. The purpose of their job is to pick funds that will outperform. They are not picking funds because they like the name, or they went to school with them; or even if they have a track record. They are picking funds to outperform. Yet all of these up and coming young professional managers could not agree on funds that would outperform! ‘By the way, this is not just for the under 30’s.
As an investor, does that not worry you?
Does that mean, out of the 90 funds chosen, they will all outperform? The evidence suggests not. Let’s imagine, however, some of the 90 funds do outperform. How do you know which ones in advance?
Then there’s another dilemma. If we agree that a fund picker, in this group of under 30 can indeed pick the funds that outperform, as an investor, how do you know which fund picker to pick!
In the bigger picture. Out of all the stockbrokers picking stocks and shares for their clients, how do you know which stockbroker to pick? They can’t all be picking all the outperforming investments?
Now you are thinking. This is complicated. How do I choose the right fund picker? How do I choose the right fund?
The answer is a process. Unless you have a process, you are relying on pot luck. And pot luck is not a good way to manage your future financial security.
Perhaps it’s time for a conversation that challenges the usual marketing investors are relentlessly exposed.