Carburton Street, London -- It seems even the most venerable of investors require Foolish education in their financial matters. Her Majesty Queen Elizabeth II has recently advertised in the Sunday Times for a fund manager to look after her investments.
Accurate information on the Queen's investments has always been thin on the ground. Philip Berisford, compiler of the Sunday Times Rich List, has estimated Her Majesty's liquid assets amount to some £400m, a figure that excludes at least £10b of property and art. In terms of actual shares in the royal portfolio, reliable details are few and far between. But press reports have highlighted a somewhat speculative nature.
Reputedly holding the shares of Internet map outfit Getmapping (LSE: GMP) hasn't been one of the Queen's greatest investment decisions. After floating at 160p, Getmapping shares currently trade at 19p. Furthermore, a recently reported stake in online music firm Poptones (LSE: POP) hasn't fared too well either. Less than two months after the claim was published, Poptones shares have since slumped 66%. In addition, according to data from Bloomberg, the Queen also has a few NCT Group (OTC BB: NCTI) shares tucked away. The stock of the "industrial earmuff" manufacturer has fallen 73% since the holding was first notified.
Whether these reports are precise or not is anyone's guess. And whether they have prompted Michael Peat to leave the Queen's money management role is, again, open to speculation. However, one thing is clear. When it comes to delegating your portfolio, constantly changing your manager will lead to underperformance.
As well as placing her adverts in the paper, the Queen ought to read some of the articles in the Sunday Times. Over the weekend, the paper highlighted:
"INVESTORS in unit trusts have only about a 10% chance of picking a fund that will consistently deliver above-average returns over three years...The alarming lack of consistency has been blamed on the rapid turnover of fund managers, many of whom have been poached by rivals or moved to manage different funds within the same firm. "
The real danger of employing an 'above-average' fund manager in any capacity is the chance that they suddenly up sticks and leave -- and take any future above-average performances with them. Not only that, but there's never any guarantee that above-average fund managers are actually above average. Have they just hit upon a lucky winning streak? Furthermore, fund managers of any ability don't come cheap, a factor that will eat into your portfolio's overall returns.
So the message is clear, ma'am. Forget about fund managers and individual shares. Get an index tracker instead. You won't have to worry whether the new manager will underperform the stock market, and it will also reduce your costs. What's more, there'll be no more embarrassing investments showing up in the papers, too.
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