Monthly Archives: April 2012
April 20, 2012
Trying to Beat the Index and Failing
Research last week showed that the majority of fund managers, whose job it is to invest the savings of millions of UK citizens are unable to beat the FTSE All Share Index.
The conclusion that we draw from this is that fund management is a pretty tough job, because you are going to get continually compared to the Index. The Index is a very formidable opponent, and as these figures show, it inexorably grinds down the fund managers until there are only a few left standing that have a better record. It’s mainly down to cost, of course – the Index has the considerable advantage of having none of the costs that funds pay like trading costs, annual management costs, audit fees, legal costs etc. The problem that investors have is that we have no idea in advance which fund manager is going to be skilful (or lucky) enough to perform better than the Index.
So we do the sensible thing and play the odds. If only 20% of managers can beat the Index over long time periods and we don’t know who they are going to be, we buy the Index, and we can do this at very low cost indeed. This way, we can be pretty sure that we are going to beat three quarters of the managers. That feels pretty good.
Once we have completed our Financial Planning process and we are engaged by a client to provide investment and wealth management services, we use Index funds to create our client portfolios. We think that this gives our clients better odds of a successful investment experience in progressing towards their Financial Planning goals than if we tried to pick a needle in a haystack by guessing which fund manager might do better than the Index.
Because we believe that such a method gives better odds, the investments and pensions of our directors are invested in exactly the same way.
Finally, we humbly echo the words of the legendary Warren Buffett:
‘Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees’.
Chairman’s Letter, Berkshire Hathaway Corp. 1996 Annual Report
It’s hard to argue with the Sage of Omaha.
April 12, 2012
Jessop Financial Planning is Sheffield’s First Accredited Financial Planning Firm
Jessop Financial Planning Limited is proud to announce that it has been approved by The Institute of Financial Planning (IFP) as an Accredited Financial Planning FirmTM, the first firm in Sheffield to gain this status.
Jessop joins only 43 other firms in the UK who have been awarded the title by the IFP, the professional body for Financial Planners. The Accreditation is only granted to those firms that have been assessed as offering the highest professional standards of Financial Planning service and advice to their clients.
In order to gain approval, Jessop had to demonstrate commitment to a full Financial Planning service for its clients as well as to the IFP’s Code of Ethics and Practice Standards, while ensuring that its advisers are qualified to advanced levels of technical competence. Jessop also had to show that it has a transparent fee structure and a clear and robust investment philosophy. Very few other Financial Planning firms are able to meet these rigorous standards.
Ben Westaway, Jessop’s managing director, said: ‘We are delighted to be the first, and currently the only, firm in Sheffield to be recognised in this way. We know that our clients not only expect, but also greatly appreciate the highly professional service that we provide for them. It is a great fillip for us now to have gained external recognition as one of the premier Financial Planning firms in the country.’
This marks the end to a promising first quarter for Jessop; assets under management have recently surpassed £6m, having grown by more than 100% over the preceding 12 months, and are expected to reach £8.5m by the end of the year.< Back