Featured and Latest Posts
The Total Costs of Investing
Investors often focus on the headline fee of a fund whilst overlooking the many other frictions that quietly erode returns. The Ongoing Charges Figure is only the starting point. Trading and transaction costs, platform fees, taxes, spreads, incentive structures and even investor behaviour all contribute to the true cost of ownership. Some of these costs are explicit and easy to measure, whilst others are embedded within performance and only reveal themselves over time. Understanding this wider cost ecosystem allows investors to minimise unnecessary frictions, pay consciously for genuine value and keep a greater share of the capital markets’ long term rewards.
Private Assets: Evidence, Access and Implications for Investors
Private markets span buyouts, venture capital, private credit and private real estate and have grown from niche allocations into large ecosystems with specialist managers and active secondary trading. Advocates often claim higher returns with lower volatility and low correlations vis-à-vis the public markets, yet results depend on how returns are measured, which benchmarks are chosen and how fees and carry flow through to what investors actually keep.
IRR can flatter early realisations, TVPI shows the multiple without timing, and public market equivalent asks whether the same cash flows would have matched a suitable public index. Once style is matched properly, much headline outperformance in buyouts compresses; venture capital offers a clearer diversification case; private credit behaves more like high yield than like defensive bonds. With dispersion high, persistence uncertain and capacity constrained, an edge in private markets is hard to get.
How Long Would an Active Fund Manager Need to Demonstrate Outperformance to Be Confident in Their Results?
Most discretionary active fund managers underperform a style-matched benchmark over meaningful periods of ten years or more. A small minority appear to outperform, but how can investors tell whether this reflects skill or luck? The Information ratio (IR) helps quantify this. Even a strong IR of 0.5 implies that investors would need around sixteen years of data before being 95 per cent confident that the fund manager’s results were due to skill. Most managers have far lower IRs, meaning the odds of proving genuine ability are vanishingly small. The mathematics simply does not support the claim of persistent skill.
Understanding Fund Manager Benchmarks: ARC, IA Sectors, and Beyond
When looking at the performance of discretionary fund managers (DFMs) or multi-asset funds, a natural question arises: ‘Compared to what?’ Benchmarks exist to provide that context, but not all benchmarks are created equal. Some measure how markets have performed, others reflect what peers are actually delivering, and each has strengths and weaknesses.
Good financial decisions aren’t about predicting the future, they’re about following a sound process today.
In investing, outcomes are noisy. Short-term performance often reflects randomness, not skill. Yet fund managers continue to pitch five-year track records as if they prove anything. They don’t.
As Ken French puts it, a five-year chart ‘tells you nothing’. The real skill lies in filtering out the noise, evaluating strategy, incentives, costs, and behavioural fit.
Don’t chase what worked recently. Stick with what works reliably.