When I started working for a small village independent financial adviser, I didn’t know much about investing.
Keen to learn more, I met weekly with various investment professionals.
These guys and girls looked and sounded smart. They were engaging communicators, and I often felt inferior sat opposite them.
If their investment fund had outperformed, they sat comfortably and explained how the good run would continue.
If their investment fund had underperformed, they explained why and how the fund was positioned for future success.
Then, I started to question:
How can every investment fund be positioned to win – surely there will always be winners and losers?
At the time, my research was focused on 1 and 3 year performance and the investment funds selected for clients changed regularly.
It felt like we were chasing short term performance, although our clients were investing for 10+ years.
I started to read further about how investment markets work, investment costs and risk vs reward.
Here’s what I found
There are always winners and losers – for every buyer, there’s a seller, and vice versa
Of the top 25% performing funds from 2014-2018, only 22% remained top performing from 2019-2023. Picking funds based on past performance doesn’t work.(1)
Generally, lower cost investment funds tend to outperform higher cost investment funds. (Costs impact overall returns) (2)
The problem is the world sets investors up to fail.
Did you see the headlines a couple of weeks ago about investment markets falling?
Probably …
Have you seen any headlines confirming stock markets are back up to where they were?
Probably not …
It took me 3 years to realise the investment approach I’d been taught was all wrong. To realise the smart people with good stories didn’t know as much as it seemed.
Now, MUVADO uses an investment philosophy based on evidence from 100 years of market history, not the past 12 months.
If you want to learn more about how to invest, we can help.
Investments carry risk. The value of your investment (and any income from them) can go down as well as up and you may not get back the full amount you invested. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
1 Dimensional study using US-Domiciled funds using Morningstar categories from 1st January 2014 to 31st January 2023. Contact me for further information.