Investment management - making the right choice

Successful investment is critical to your future financial well-being, but it is a field which presents a unique problem; future performance is unpredictable. As a result, when you choose a fund manager, no matter how successful, you can never be sure that you have made the right choice. And even if you have, it may not continue to be the right choice over the years to come. The problem stems from the fact that there are very few investment professionals who can consistently deliver high quality investment performance over the medium to long term.

For whatever reason, there exists today an obsession with the short term and this manifests itself with investors buying the latest fashion, only then to be disappointed. What really matters to investors is the longer-term performance of their investments, rather than the outcome for any particular year.

There are a number of ways to select an investment manager. Firstly, you can look at their past performance. Regrettably this in isolation is of little help - simply because the figures alone do not tell you whether the person who achieved that good result is still managing the assets. Furthermore, past performance figures should not be seen as an indication of future performance. In the investment industry it is commonplace for managers to move around and this has significant ramifications for investors because if they do find out that a star manager has left, they then have to decide what to do next.

Having selected a manager to look after your portfolio or indeed a number of investment professionals to manage your assets collectively, you then have the task of monitoring their performance. Most of us do not have the necessary resources or probably the interest to do this in a thorough, meaningful way on a daily basis - preferring instead to review our investments once or maybe twice a year.

As mentioned earlier, the final, and often overlooked, aspect is the benefit of diversification, which is widely recognised as an effective way of reducing investment risk. Experience shows that too many investors are either not diversified or, in contrast, excessively diversified. The former leads to concentration of risk and the latter to the dilution of investment returns.

So as a first step you need to reassure yourself that those who are entrusted with the day-to-day management of your money have been handpicked, have a good long term track record and are being independently monitored by other investment professionals.
If you would like without cost or obligation to complete a review of your own investment fund performance please do send us an email or call the office and we will arrange a short meeting to gather the information required to provide you with a full report.