The
reason investors are switching to trackerfunds is because they
offer consistently better performance.
The
evidence on both sides of the Atlantic is very clear.
In
a recent update of his book, A
Random Walk Down Wall Street, (available at
Tracker Magazine's online bookstore) Burton G.
Malkeil calculated that since he first recommended tracker
funds 30 years ago, a Wall Street tracker mutual fund had
turned an initial investment of $10,000 into $311,000
compared with $172,000 for the typical active general equity
fund.
In the
UK, the picture is the same.
Just
one in three unit trusts managed to outperform their
benchmark index in the year to the end of December 1999.
This poor record is actually an improvement on the year to
September 1999 when just 1 in 4 beat their benchmark index.
(Source HSBC Asset Management and Sunday
Telegraph 30th January 2000)
An
authoritative report has also been published recently, The
WM Company Report which contains a detailed comparison
between actively managed equity unit trusts and passively
managed or 'tracker' trusts.
And
the explanation?
The
heart of the problem with actively managed funds is their
high charges. The
Financial Service Authority (FSA) - the City's Watchdog -
published a research paper entitled "The
Price of Retail Investing in the UK". This
found that between 1987 and 1999, on average a consumer
would have needed to pay £1.50 to ensure that £1 was
invested in the market.
If
this evidence has convinced you, why not check out our
current special promotions?
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