LETTER: It’s about managing behaviour
Financial advisers should be more concerned with managing the behaviour of their clients than selecting the best fund
I am tired of market commentators discussing which funds are the best performing and which index trackers are best, with the lowest costs. It is my understanding that US investor Peter Lynch had the best-performing fund over 13 years, netting 27% after fees. But the average investor in his fund lost money. Why? Because each time the market goes up, investors buy more, and each time it goes down, they sell or withdraw money. They buy high and sell low. The conclusion is this: if you control your behaviour, you can be invested in a mediocre fund or index and still outperform peers who are invested in the best funds. Financial advisers should be more concerned with managing the behaviour of their clients than selecting the best fund. Jeandre PikeJoburg The FM welcomes concise letters from readers. They can be sent to fmmail@fm.co.za
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