At last - despite numerous studies, papers, analysis and so on from investment legends such as Warren Buffet and Eugene Fama, the FCA has finally published a study criticising active investment fund managers that they do not result in better performance despite charging high fees.
No doubt, this will send shock-waves through the industry, disapproval from those charging their clients huge fees for being able to read the market - that random thing which is affected by all sorts of random acts and outcomes.
Add to that, common issues with active funds such as lack of transparency, high costs, obscure fees and charging structures, not to mention frequent under performance and higher volatility when compared to the market average, it seems that more investors will start to consider the passive investment market, which whilst not seemingly exciting, would appear, as outlined by the FCA offer far better value for the consumer.
At Serenity Financial Planning, we only use passive type investment funds and portfolios, with the belief that our clients would rather direct the fees they pay, for comprehensive life planning and coaching, rather than massaging the ego of an active fund manager who thinks he can predict the future. Here is our investment philosophy.
Last week the FCA published a study criticising the value of active fund management saying that the additional fees often associated with active fund management did not result in better performance compared, for example, to passive funds. The FCA said competition between fund managers was often “weak.”