A Golden Ticket to 68% Annual Returns
At Brook-Dobson Brear we are often sceptical of any investment manager who claims that they can consistently ‘beat the market’. Sure, there may be a reasonable number that do outperform the market over one year, but can they do it year on year? Can they do it over a decade? After all, most investors are rightly interested in the return they get over a relatively long time period. Their pension may be invested for over 30 years, after which they will be reliant on the accumulated pot to live out their retirement in comfort.
The below graph shows just how difficult it is to consistently pick a ‘top performing’ fund and how the odds of you doing so decrease significantly over longer time periods. If you are choosing an equity fund in which to invest your pension for the next 15 years, chances are that your fund of choice won’t be in existence by the time you retire, not to mention the chances of it outperforming the market are less than 1 in 5 (for a fixed income fund this drops to 1 in 12!). It seems to us that picking successful funds is a risk which is not necessarily rewarded and one we could do without.
There is however one man who continues to defy these odds. Cue Max-Hervé George, a 25 year old Frenchman who has a golden ticket which enabled him to average a 68.6% annual return on his investments for a decade from 1997. This golden ticket can be found in the terms of an old life assurance policy which enables Mr George to trade investments at last weeks prices. He can therefore pick ‘winning’ funds with perfect hindsight, rather than relying on market prediction. If you would like to read more on Max’s fascinating story you can read more using the following links (FT Alphaville, The Independent).
Unsurprisingly these contracts have long since been discontinued and the provider of Mr George’s policy, Aviva France, continues desperately through the courts to try to have the contracts cancelled to cut its losses.
Instead of wasting time on speculating who the next star fund manager will be, we invest our time in areas we know will yield results such as increasing diversification and lowering costs. We take an evidenced based approach which is underpinned by research from leading academics, including Nobel laureates. This ensures that the risks we take in our investment portfolios are efficiently rewarded.
Feel free to get in touch to find out more about our approach to investing and the role of our investment committee in delivering our personal finance director services.