YOUR PORTFOLIO
/ MYTHS /
HIT OR
MYTH?
Pádraig Floyd examines five oft-repeated
pieces of investment wisdom to see whether
they are grounded in fact or fiction
F
OR MANY,
INVESTMENT
MANAGEMENT is a
fascinating but
impenetrable subject.
Though dominated by science
and professionalism today, there
are still a few old adages or rules
of thumb that cling on in the
collective investor consciousness.
Many adages tend to contain a
germ of truth, but are you likely to
lose your shirt if you apply any of
these to your portfolio?
MONKEY 1:0 FUND MANAGER
We know that trying to time the
market is a fool’s errand. Fund
managers back their convictions
with millions of pounds, hoping to
take advantage by being in the right
place at the right time.
Yet, there is a persistent belief that
a monkey, child or darts randomly
thrown at the FT’s companies
section will be able to beat most
fund managers.
As you may expect, James de
Bunsen, fund manager of the Janus
Henderson Alternatives Strategies
Trust, does not favour our simian
cousins over his peers.
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“It’s entirely feasible for short
periods,” says de Bunsen, “but gets
more difficult if things get volatile.”
While people do put fund
managers on a pedestal in a way
they don’t with other professionals,
Laith Khalaf, senior analyst at
Hargreaves Lansdown, says “the
monkey is the market, really”.
“There are many fund managers
who fail to beat the market, but
there are others who do,” he
explains, pointing to Neil Woodford,
Richard Buxton and Nick Train.
“They’ve been around a long time
and delivered outperformance over
a long period.”
WHAT GOES UP,
KEEPS GOING UP
Certain investors believe stock
markets always go up over the very
long term. This is an argument it
has become difficult to contradict
in recent years with most major
indices hitting record levels.
Following their strong recent
performance, Khalaf accepts
markets could fall in the short term.
“However, we will get a positive
return, as there’s no 15-year period
we don’t have one,” he adds.
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