We all know that past performance is no guide to the future, yet investors often have little else on which to base allocation decisions than examining fund managers’ track records, writes Gill Wadsworth, this week reviewing Morningstar’s study of fund manager performance.
“Prospectuses and reports invariably show a fund’s total returns and comparisons with benchmarks, but these give no indication about whether strong or weak results will replicate from one year to the next,” Wadsworth writes.
Such unsatisfactory information has driven Morningstar to call on investors to consider persistent outperformance, rather than past performance, as a better way to assess future investment success.
Eugene Gorbatikov, Analyst, Manager Research at Morningstar, says: “Investors are often tempted to chase last year’s best-performing funds, but our research shows that this is rarely a reliable strategy. While short-term outperformance does occur, it is difficult for funds to sustain a top position over time. The data suggest that persistent outperformance is the exception rather than the rule.”
Our In My Opinion this week comes from Bev Shah of City Hive who writes that as policymakers and industry push for greater allocation to private markets – including UK initiatives such as the Mansion House Accord – distribution is expanding into wealth and platform channels.
“Private equity, private credit and infrastructure have historically been the preserve of institutional capital. That boundary is now shifting,” she writes, warning that as the transition accelerates – through both market evolution and policy direction – an important question follows: are investors accessing these assets through wealth, platform and pension structures being exposed to risks that are simply less visible than those in public markets?
We have two ETF focused pieces of content for you this week, with our latest roundup of global digital assets in ETP form that are enduring something of a chilly patch, if not out and out crypto winter, brought to you by ETF Express, Trackinsight and CoinDesk.
We also bring you our latest ETF Express podcast on that uber-fashionable new strategy, autocallables ETFs, with Solactive’s Timo Pfeiffer explaining all.
Finally, I am very pleased to be back chairing two ETF panels at IMPower Fund Forum again this summer. Come and find us. And, using this link, I can offer you a 10 per cent discount on the attendance.
Beverly Chandler, Managing Editor, Institutional Asset Manager
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