I know, I know.. football is about as overexposed as it gets. Yesterday saw the end of the “transfer” window. This is the biennial shuffling of cards that seems to amuse oligarchs as much today as it did in the playground swap market. All that really happens is that a lot of agents make a lot of money by getting hapless footballers to switch teams, hopefully to get a better chance of playing for more money. The slight twist being that some will now consider moving to a lesser team in order to play more frequently, but perhaps not as well paid but compensated by the increased visibility and revenue from other “endorsements”. Amusing in some respects as Managers reverse opinions and decisions that they were holding as fact just days earlier.

It was with interest then that I came across an article in my quality trade press by Paul Farrow. He was berating the Fund Management industry for failing to heed its own advice – to stay true to core principles and the long-term strategy. He points out that for almost every new fund launch another is closed. He states that since 1999 2,660 funds were launched and 2,486 were closed. As a result, invariably the duff funds (or “poorly perfoming” funds) are regularly taken out of the statistics, which in turn hides the real story of massive under performance of the market. As a result the “league tables” or rather performance tables are highly inaccurate and should not be relied upon. Add to this the comings and goings of Fund Managers, mergers of Investment Houses and you quickly get a sense that perhaps the investment industry does just as much shuffling of the pack as the football business. However rather than farming out an under performing striker to lesser divisions they simply get discarded to non-league and non-statistic status.

This explains why Fund Management groups have a reasonably large marketing budget. It would certainly be a full time job trying to massage data to show a poor fund in a good light, making it appear difficult to select anything else. Yet selecting the right Fund Manager is a process that is riddled with problems, so much so that to pick the winning team in say 10, 20 or 30 years time is about as pointless a task as gluing the leaves back onto trees in the hope of delaying Autumn. This merely adds to my conviction that in practice selecting the best Fund Manager is not possible consistently and why we use cheaper funds that track the market, providing a market return less costs. This is something that over the long-term the overwhelming majority of Fund Managers fail to achieve. You may find the document on my website a helpful resource in this regard. In truth, I have no idea who the next “Anthony Bolton” will be any more than I know who will be the next Alex Ferguson.  

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