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19 Sept 2016 (AFR) – Marcus Padley ruffles feathers – To funds management industry: ‘the game is up’

[COMMENT: Wow!! When the well-respected Marcus Padley comeos out with the following information, it is very important for the average retail investor to sit up and study the detail.]

(19 September 2016, AFR, p20, by Vanessa Desloires)

‘Stockbroker turns to separately managed accounts (SMAs)’

‘Marcus Padley is one of the country’s most recognisable stockbrokers, although he admits he’s not particularly popular within his own industry.  The straight-shooting Englishman has built a successful business around his Marcus Today newsletter, but is also known for his habit of pointing out the shortcomings of his own industry through the media. He now has his sights set on funds management. Padley’s insights through regular columns include “anyone who says ‘If you never sell you never take a loss’ is a complete idiot”.’ <snipped…>

According to Morningstar, around 35 per cent of actively managed equity funds hit or outperform the S&P/ASX 200 accumulation index over five years. In the US, the number is less than 10 per cent.‘ <snipped…>

‘… Padley is not a believer in diversification, arguing a fund with 300 stocks across five countries and five currencies is riskier, particularly if the manager doesn’t have an detailed knowledge of each company.’ <snipped…>

‘… The investment team start with a theme, then within that identify a basket of stocks and filter based on company fundamentals. They then look at trends, or charts, to see whether the stock’s chart is showing the market is buying or selling, and then try to time the investment. The management is 95 per cent of the job, Padley says.’

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