MoneyTalk

 

The Funds To Follow In 2012

05 December 2011
In this week’s episode:

David Kuo chats with Mark Dampier from Hargreaves Lansdown, whose knowledge of funds is encyclopedic. David asks Mark why some star fund managers, who were once almost hailed as demigods, have come crashing down to earth like spent meteors. They look at the way that fund managers are paid, and question whether this is fair. Mark also talks about the funds that we should keep our eyes on in 2012. A transcript of this podcast is also available.

 

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David Kuo and Mark Dampier
David Kuo and Mark Dampier

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Comments

The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

TomJefs 05 Dec 2011 , 9:44am

Transcript as usual please.

DaveG14 05 Dec 2011 , 10:12am

As a total newcomer to all this financial "stuff", I found this podcast really interesting, and useful; I'm going to read the transcript, to make sure, but in the meantime I look forward to the next one; Thank you!

TMFDragon 05 Dec 2011 , 11:18am

Hi Listeners

The transcript should be ready this afternoon.

Foolish regards

David

rober00 05 Dec 2011 , 5:24pm

Whilst it is great to hear from Mark I am suprised to find him on the Fool. Fool constantly reiterates the enormous and unnecessary cost of investing in Unit Trusts/OiECs and yet it promotes them in this podcost.

Very strange behaviour.

Sponsership income perhaps????

TMFDragon 05 Dec 2011 , 7:18pm

Hi rober00

Ideally we would like everyone to build their own portfolio of shares themselves. But for some people, investing through funds is an easier option.

However, if you do invest in funds then you need to be aware of two very important things. The first is that the fees will eat into your returns. The second is that the majority of fund managers may not beat the market.

Best regards

David

AleisterCrowley 06 Dec 2011 , 12:04pm

Surely the best approach if you need an 'easier option' is to buy a tracker? I'm not sure where a managed fund fits in really. Only a minority outperform the index, and selecting an outperformer is impossible (if one could all the money would flow out of the underperformers...)
Can you outline the argument (any argument) in favour of managed funds. The only one I can think of is if you need exposure to a specialised sector/country (eg Japan/BRICs) and don't have the knowledge/access to build an indivdual portfolio.

rober00 06 Dec 2011 , 4:46pm

David - a monkey could beat 50%+ of IT/Oiec fund managers simply on the basis of the costs they have to work against. This is not generally true of IT managers.

Additionally statistics show that to be sure of following a super fund manager you would have to wait twenty years to find out whether this was true or not. It was certainly true of Anthony Bolton in his former life, where evidence shows thta although overall he was outstandingly successful, he had large periods when he was in the doldrums and as a result the vast majority of followers left, meaning that very few actually achieved the returns he achieved.

I am a great believer in keeping costs to a minimum as I am sure you are and therefore I can see no justification for any UT/Oiec in my portfolio. However when it comes to ITs then ones of the nature of the European one I have purchased today which stands at an 11% discount and an 8% yeild fit the bill very well, as many of your writers have pointed out.

MunroMan 06 Dec 2011 , 5:56pm

David, why didn't you ask him how he selects his W150 funds?

Some of them are real dogs, why are they still there?

TMFDragon 07 Dec 2011 , 9:34am

Hi AleisterCrowley

I agree - there not many compelling reasons to use managed funds when a Do-It-Yourself approach can be just as effective.

The one you cited, namely, access to inaccessible markets would probably be the most persuasive. But we can’t get away from the fact that some fund managers have an enviable track record - Peter Lynch, Neil Woodford and Anthony Bolton are obvious standouts.

I guess the point is that some (not many) professional investors are very good at beating the market. And we can’t put that down to luck.

Foolish regards

David

AleisterCrowley 07 Dec 2011 , 12:26pm

Any normal distribution will throw up a few exceptional performances.. These wil be contrarian/lucky?? investors who don't follow the crowd (if they did they'd be in the middle of the distribution...)
For every Bolton/Woodford/Lynch there are probably 'mirror image ' investors at the other end of the distribution with the same behaviours, but who crashed and burned.
Survivor bias means we don't hear about the exceptional underperformers !
Even if you disagree and think a few managers have a 'magic touch' how do we pick them out from the thousands available ? The star managers are only obvious looking backwards..

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MoneyTalk is a podcast from The Motley Fool (UK). Hosted by David Kuo, it’s a lively roundtable discussion where Fool writers and guests from the world of money thrash out the financial issues of the day.

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David Kuo is The Motley Fool’s media personality. He can be heard on BBC London’s (94.9FM) Breakfast Show where he arouses listeners every weekday morning with his unique brand of financial news. He is also a regular commentator on national news programmes including CNBC, BBC News, and Sky News.

David stumbled into the world of broadcasting at the turn of the Millennium when he was invited to comment on the stock market crash. He says, “I think I stunned Londoners speechless when I said the good thing about the crash is that shares are now more affordable for people who want to invest in the stock market!”

His attitude to investing has never wavered, as he always sees downturns in the market as a buying opportunity for long-term investors.