Look closer at performance: Macquarie
Fund performance tables can be a misleading indicator of actual performance without looking into the driving factors, according to aMacquarie Funds Managementstudy.
The recent performances of some Australian share fund managers have been influenced by market conditions, funds size and even the way indexes and surveys are constructed, but these factors are often not reflected in the performance tables, the report reveals.
Macquarie Funds Management’s product development and research head of marketing, Dr Phil Dolan, and quantitative analysis head Geoff Wells, say the way information is collated together with driving factors which do recur, such as the tech bubble, can lead to a misleading interpretation of information.
“Performance tables give the impression that the median active manager comfortably beats the benchmark. Yet when you dig beneath the data there are clearly a number of additional questions an investor should be asking to determine what value the manager has added,” Well says.
Dolan and Wells suggest a number of questions to direct to Australian share fund managers performing well in the tables include the index weight exposure to small companies and whether the survey data has given equal weight to the returns of large and small funds.
“While some well run actively managed funds can achieve genuinely good returns compared to benchmark, our research underlines the message that investors need to look beyond the survey data to understand why individual funds have outperformed in the past five to 10 years.” Dolan says.
Recommended for you
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
