Is your investment fund a "turkey"?
29/11/2007
Many older ISA and PEP investors are looking at serious losses unless they take action on "turkey funds", warns investment data comparison site Moneyspider.com.
The stark differences in returns for investors with some of the UK’s biggest fund management firms, unveiled in disturbing new research by Moneyspider.com, underlines how vitally important it is to select the right fund – as well as the right fund manager.
Moneyspider.com’s new data shows that some of the UK’s most respected fund managers are delivering stellar performances in some funds – and atrocious returns in others.
Striking examples include Invesco Perpetual’s Latin American fund: an investor putting £5,000 in the fund in November 2002 over the five years would today have made a profit of £31,035, thanks to outstanding growth in this high risk high reward sector.
But that same £5,000 invested in IP’s struggling North American US Equity fund would have made a paltry ‘profit’ over 5 years of just £230 – a difference of £30,805.
“The bigger fund managers have very seductive and powerful marketing campaigns, and five years ago with the post 9/11 recovery, the States would have appeared to be a very good bet for investors wanting serious growth,” reflects Moneyspider.com’s Tony Ahearne.
“But situations change and you can’t expect your fund manager to tell you which funds are dogs - even if that’s where your money is invested. It’s essential that investors take personal responsibility for monitoring the performance of their funds on a regular basis,” he added.
“As we can see from our latest data, it is crucial to select the right fund – a gain of £30,000-plus on £5000 over five years is a phenomenal result... but the hapless investor who backed the wrong horse in the shape of the world’s biggest economy has lost his shirt by comparison.”
“Another example of how vital it is to select the right fund as well as the right fund manager is the performance of two Jupiter funds: Emerging European Opportunities and Global Technology,” adds Ahearne.
“Here the investor who had gone for the former five years ago would have enjoyed an enviable profit of £26,265 on a £5k investment. But if he or she had put the same £5,000 into Jupiter’s Global Technology Fund, the profit would have been a meagre £1,105 in the last half a decade.
“But investors would have found the Global Tech fund very plausible indeed. Jupiter is an excellent fund management house, and the resurgence of the technology story following the collapse of the sector in the late 90s made for a compelling reason to get back into that sector.
“It was emerging markets making all the running however, and the lesson to be learned from the data we have published today is that investors should not be seduced by the multi million pound marketing muscle of the household name investment houses – choose the right fund manager, certainly….but make sure you are in the right fund.
“And, crucially, keep a watchful eye on performance not only of the fund and sector you’re in but also funds and sectors from across the whole market.
Closer to home there is also a marked difference in funds devoted to the UK sector. Marlborough’s Special Situations fund, focusing on the UK smaller companies sector made a healthy £15,530 profit on £5k invested in 2002.
“Yet this highly respected fund manager could only manage profits of £2,960 with its flagship UK Equity Growth fund – the one which the vast majority of investors will have piled into on the back of the company’s major marketing campaign for the fund,” says Ahearne.
Moneyspider.com offers investors the opportunity to be much more savvy about how their funds are performing-or not performing- by way of its fund monitoring service
Designed to appeal to the ‘Joe Average’ investor, it is a comprehensive yet easy-to-understand fund monitoring service with personalised reports, including valuations and ratings on each investor’s individual fund updated on a daily basis.
Further details on the mechanics of Moneyspider.com can be found at the website linked below.
“Our research illustrates how crucial it is to be up to speed on how your investments are performing – it can often make the difference between a comfortable and a miserable retirement,” adds Ahearne.