1 year ago

Blue Chip Issue 83

  • Text
  • Fpi
  • Hollard
  • Liberty
  • Offshore investing
  • Equity
  • Outsurance
  • Financial planning
  • Financial
  • Financialservices
  • Investing
  • Advisor
  • Planner
  • Momentum
  • Global
  • Coaching
  • Professionals
  • Investors
  • Investments
  • Funds
Blue Chip Journal is the official publication of the Financial Planning Institute of Southern Africa NPC (FPI), effective from the January 2020 edition. Blue Chip is a quarterly journal for the financial planning industry. Blue Chip publishes contributions from FPI and other leading industry figures, covering all aspects of the financial planning industry. Visit Blue Chip Digital:


BLUE CHIP FUND PERFORMANCE If you chase performance, you’ll never catch it The simplest behavioural changes could vastly improve the investor experience. A study by the consulting firm DALBAR examined the effect of chasing returns between 1984 and 2003. Investors in mutual funds who frequently traded out of funds during that period earned an average annual return of 3.5%. In contrast, the market, as measured by the S&P 500 Index, earned a 12.9% average annual return. The results consistently show that the average investor earns less – in many cases, much less – than fund performance reports would suggest. A further study by Vanguard compared the returns of a simple buy-and-hold strategy (in all funds) versus buying the bestperforming funds. The results are startling. In all nine equity style boxes, the returns produced by the buy-and-hold strategy were significantly better than the performance-chasing strategy. The legal disclaimer: Past performance is not necessarily indicative of future results, is often ignored but seems to certainly hold true among the recent best-performing funds. Figure 2. Buy-and-hold was superior to a performance-chasing strategy across the board: 2004–2013 Source: Vanguard Ian Jones, CEO, Fundhouse

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