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Active vs passive fund management is not the issue. It is whether you can stick to whatever you have chosen when the going gets tough
A few issues ago, we highlighted a study by a US research firm Dalbar Inc. which underlined the fact that while funds earn a return that is reflected in the change in their net asset values (NAVs), the average investor makes much less money than the NAV change...
In our last issue, we highlighted the first three of the seven sins of fund management, as described by James Montier, Global Equity Strategist with Dresdner Kleinwort Wasserstein. Here are the other four, starting with the biggest problem with the fund management business -- the assumption that a fund manager can out-smart the market.
Sin 4: Thinking you can out-smart everyone else (Envy)
James Montier is a thoughtful person. As a global equity strategist with Dresdner Kleinwort Wasserstein, a top broking firm, he believes in taking an independent approach to understanding all about the investment process. In November 2005, he had written a paper titled “Seven Sins of Management: A Behavioural Critique”. This article was widely read by the investing community but it is...
