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Are Fund Managers Competent?

This article is reproduced with permission from
Normandy Advisory Services Sdn. Bhd (Licensed Investment Advisor)
15th Floor Menara Multi-Purpose, No 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur
Tel : 03 - 469 5560 Fax : 03 - 294 5561


This article is copyright and no part of it may be reproduced in any form without the prior consent of Normandy Advisory Services


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A technical analyst may impress you with all his technical jargon but how many times does he actually hit the bulls eye? Since technical indicators do not care much about any fundamental change, did his chart tell you precisely where the "support" would be when the KLSE fell so sharply recently?

Many people just entering the financial world will be baffled by the inaccuracy of some investment forecasts given by professional market analysts. Poor stock selection is often the main cause behind many fund manager's poor performance. Thus, given the analysts and fund managers' poor predictive performance, would an investor be required to form his own opinions? After all, it is your money that is at stake.

So do you think you are ready to invest or manage your money more seriously after a few years exposure in the local stockmarket or now that you have accumulated enough tips from the all the books written by acknowledged investment gurus?

Remarkably, there are some investors who manage their money better than fund managers. Some people outperform a fund manager by simply buying some good stocks and hold them over a longer time period.

Perhaps this explains why investment guru Warren Buffet, with his simple technique of "buying and holding" is regarded as the 20th century's prime investment success.

There is no great secret behind Buffet's excellent investment success. Simply buy the best and hold regardless of the market volatility as long as it retains its quality.

If you are thinking of setting up your own investment funds. Here is one solution. Simply buy a selected portfolio of blue chips, be patient and wait for the returns in years to come (long term investment).

If your capital permits, include bonds and some other form of securities for diversification. There will be no management fees and whatever extra marketing charge. Everything is under your control, both the risk and reward.

On top of everything, it is easier to be said than done. In the local environment, you may not be able to get all the information you need for your decision-making. In order to make wise investment decisions, quick and reliable information is a prerequisite to form intelligent investment decisions.

Newspapers alone will not help much. But the real problem lies with the fact that local investors are not interested in studying too much but would prefer to purely listen to market rumours to invest.

You have to do more homework if you decide to manage your own money. You will have to allocate more time for your investments and you have to basically think more systematically and long-term which is pretty hard for local short-term speculators who claim to make fortunes in a very short time frame. In addition, you may not have the precious time to check the progress of your investment.

Some investors subscribed to investment advisory services and this is not, idea especially if you are not familiar with the investment world.

In conclusion, as the market is growing more intense with so many funds to pick from, investors should be more demanding to get back the value for their investments. Be more critical in assessing the performance of the fund managers.

Remember that they are paid to perform for your hard-sum money. If the friend cast you have invested have not been performing compared to other funds for the past several years, act promptly - dump the fund manager. Be extremely selective as there are many more fund managers available in the market now as compared to the past several years. As an investor you deserve what is best for you.

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Reproduced with permission from Normandy Services Sdn Bhd, Email:nassb@po.jaring.my Tel:603-4695560 Fax:603-2945561