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Choosing
a 'Stylish' Fund Manager ...
There are many
criteria investors use to select an appropriate fund manager. Some
go on brand name alone. Others use a more scientific method incorporating
performance tables, research ratings and staff credentials. One criterion
investors often overlook, but one that is critical to the performance
of the fund manager, is investment style.
If you have never invested
with a fund manager, or if you are in the process of looking for a
new fund, choosing a manager with an investment style and objectives
that closely reflect your needs may determine how happy you will be
with your investment decision.
What
is 'investment style'?
Investment style is, in
simple terms, the way a fund manager invests your money. There are
many different styles used by managers, however, the most common can
be summarised into two broad categories - 'active' and 'passive'.
Fund managers that employ
an active investment style continually monitor the markets and change
the investment mix of their funds depending on where they see the
markets heading. Active managers have the ability to substantially
alter the investments of a fund in anticipation of opportunities for
higher returns. They are also able to protect the funds by investing
in more defensive investments, such as cash, if they predict a fall
in the sharemarket.
Passive managers generally
set the investments of their funds according to a benchmark. Rather
than making changes to their funds in line with the markets, they
only change the investment mix to keep their funds in line with the
benchmark. Index funds are an example of a passive management style.
Index fund managers try
to match a particular index by investing in securities that are representative
of that index. An Australian share index fund, for example, will have
a representative sample of shares aimed at matching the All Ordinaries
Accumulation Index. Index fund managers are guided in the management
of their funds by changes in the index.
Active
or passive - what's best for you?
How do you decide which
investment style is best for you? Well, it really depends on your
attitude to investing.
Passive managers have a
'set and forget' approach to investing. In general, they provide investors
with a return that is broadly in line with the market, so you will
generally have an indication of the performance of the fund from the
way the markets are performing.
Passive managers experience
good returns when the market performs well. However, when the markets
are more volatile or providing poor returns, passive funds are unable
to protect your investment against these market conditions and performance
can be disappointing. Index funds have been promoted as more cost
effective than actively managed funds. Generally, this is because
passive fund managers undertake significantly less research than an
active manager and therefore need to employ fewer staff.
Rothschild employs an active
management style that we call value investing. We research the markets
we invest in and determine their relative value by analysing many
different characteristics. We aim to purchase investments when their
prices are low compared to the income they can produce, and sell if
they no longer represent good value. Using this method we aim to achieve
competitive returns over time.
For
more information about Rothschild,
phone us on 1300 65 65 68
between 8.00am and 7.00pm (Sydney time), Monday
to Friday,
contact your financial planner,
or click here to visit our website
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Rothschild
Disclaimer
Investment
in any Rothschild managed investment may only be made on the application
form attached to the current prospectuses which are available from
the Manager, Rothschild Australia Asset Management Limited (ACN 000
727 659) and which have been lodged with the Australian Securities
& Investments Commission. Rothschild receives fees from the issue
of units in these funds and from time to time holds units that it
has repurchased which it may resell at a price which is higher than
the price it paid for the units. Rothschild may also vote on such
units subject to the provisions of the relevant Trust Deeds.
Nothing in this
material constitutes an offer of any investment or an invitation or
solicitation to subscribe for or purchase any investment to any person
in any state, foreign country or jurisdiction where such offer or
solicitation may not lawfully be made.
The information
is based on Government laws and regulations current at time of issue
(April 1999). This information is not intended to be relied upon for
the purpose of making an investment decision. This material provides
general information only and does not constitute financial advice
or a recommendation in respect of any Rothschild product and should
not be relied upon as such. The material is made available in good
faith by Rothschild and has been derived from sources believed to
be reliable and accurate. However, it is not intended to be a complete
description of the matters described and Rothschild assumes no responsibility
for updating any information contained in this material or for correcting
any error or omission which may become apparent after the material
appears on the Internet.
Copyright in the
material reproduced on these pages is owned by Rothschild. Except
to the extent otherwise permitted by the Copyright Act 1968 (Cth),
the material may not otherwise be reproduced or displayed in public
and may not be distributed or transmitted electronically to any other
person or incorporated by any means into another document or material,
including other websites. Without limiting the generality of the foregoing,
Rothschild does not permit reproductions of its material in other
websites in conjunction with advertising, trade marks, logos or material
of other financial planners or competitors in circumstances when it
has not given its prior written consent.
Investments in the
funds are not deposits with or other liabilities of NM Rothschild
& Sons (Australia) Limited (ACN 008 458 366) or of any other company
in the Rothschild Group, and are subject to investment risk, including
possible delays in repayment or loss of income or capital invested.
Neither the repayment of capital nor the investment performance of
the funds is guaranteed by NM Rothschild & Sons (Australia) Limited,
the Trustee or the other companies in the Rothschild Group.
AFSD
Disclaimer Notice
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