Forum Archive Index - January 2002

["WALKER GEOFF,MR" <GEOFFERY.WALKER@NZDF.mil.nz>]

Andrew

couldn't agree more with your comments (but admit to being invested in Tower
GAM Trading and OMP, both hedge funds)!

I too was convinced by the so-called experts and advertising that unit
trusts were the best way to go.  Unit trusts provided;

*       the best returns, and
*       diversification into numerous stocks and markets that the average
investor could not invest in, and

Whilst I'm sure one could argue all day that some, if not all of the above
attributes are provided, they come at a high cost.  End of the day what is
the most important thing an investor wants - decent returns.  Regrettably, a
large number of funds have, and continue to produce dismal returns.  

IMO, some of the major cons against using unit trusts / fund managers;

*       the management fees are very, very high (often 2-3+% excluding tax),
*       their stock selections are only marginally better than the average
investor could pick,
*       the returns are often no better than the indices they invest in,
some perform considerably worse.  A book titled:  A Random Walk Down Wall
Street sums up the fund management industry extremely well.  Apart from one
or two top investors in the US, such as Peter Lynch, the vast majority of
funds in the US performed dismally over the long term, worse than the Dow
performed!  If a comparison was done in NZ or Australia, I suspect a similar
pattern would emerge.

Me, well I've bailed out of BT and invested the proceeds into MDZ and OZY
(Mary Holmes would be happy!).  I will invest in WINZ when the inevitable
shake down occurs in the US and our currency appreciates a tad more (yes, I
might be waiting a long time but I have one thing on my side that fund
managers don't - patience).  I also have a sizable investment in NZ
equities.


Regards

Geoff Walker 


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