Recently, the biggest fund managers in New Zealand got together for their fund manager of the year awards night.
Short term investment returns are more about luck
I’m not going to tell you who the winners were because who cares about 1-year returns? Honestly.
I put winners in quotation marks because can you call someone a winner after 1 year of returns?
In that case, a drunk, blindfolded, dart throwing monkey could easily ‘win’ over such a short time frame.
Most of these funds are long term holdings for investors of 10 years plus. Any less than that and your stock and property holdings should be minimal from a risk perspective.
So, for an industry that ALWAYS tells its customers not to put any weight on hundreds of years of past performance, I find it extremely hypocritical, for them to go off and celebrate just 1 year of past performance.
Then they add to the hypocrisy by advertising their new award to the public, which is quite frankly irresponsible. To promote one year returns for products that are suitable for a minimum of 10 years for most of us, is misleading and deceptive. “Kiwisaver provider of the year 2019”. “Best NZ Equity fund 2019”.
1-year returns, as evidenced by the dart throwing monkey, is more luck than skill. Long term returns would be better, but even then, not perfect as previous winners tend to be future losers.
Long term investment returns are all that matter
So, do yourself a favour and ignore the noise and stop chasing performance. Pick a company you like, that has funds that suit your investor profile and strategy. That’s it. The rest is just noise.
I only look at my portfolio once a month to update my net worth, but if I wasn’t doing that, then I would probably only look once a year. That’s because I know the current performance doesn’t matter, as I am confident in my choice of funds meeting my needs. If I keep chopping and changing towards the hot fund of the year, then I am already behind the 8 ball. By that time, the hot fund has probably already started to revert back to average or even sub-par performance.
If you do want to change funds, then only do so because it is a better match for you and your strategy. Not because it is a one year (lucky) champ.
If you need an investment plan or recommendations , then get in touch today.
The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here