About tables and rearview mirrors

Today I get back on my soapbox and look at surveys on investment performance.

We all love tables especially when these tables are related to football, and leagues and the teams that vie for that top slot.

But tables and league tables when it comes to investment performance are in my mind a totally different kettle of tuna if you will excuse the mixed metaphor use.

Let me make a connection between these two seemingly unconnected points.

If you were a betting person and decided to look for a winning team to bet on for a particular game, you would do your research, study the teams form, look at the past record, and then compare your results with those of their opposition.

You would make it your business to understand everything you could about the team, the manager and their strengths and weaknesses, as well as any injuries, going into that game. You would get under the bonnet and scrutinize everything.

In short you would look at everything, and then bet the amount you could afford.

Well, when it comes to selecting funds to invest their hard-earned capital into it appears that people arent really punters, because they dont do their research, they dont look at the team and the manager, they generally look purely at their past performance. This would be akin to driving a car using your rear-view mirrors to see where you are going.

The fact is that funds are managed by people and fund managers are people too. Investors should be looking at the whole picture before they decided to invest. One issue that is often overlooked is when a team member leaves an investment house, or a new fund manager steps in.

The investment experts will tell you that this shouldnt make a difference, that its all about the mandate. Well, heres the thing. If that were the case then people wouldnt be needed to manage funds and the mandate could do everything. There would be no human interaction or intuition needed and everything could be computerized.

There is a place for tables and awards and winning first place, but this should be just one of the tools and indicators that investors should use when considering where to invest.

Do your research, get advice from the experts and try not to become one of the herd or lemmings as they head over the cliff.