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Financial Happenings Blog
Sunday, January 20 2013
APRA have recently released the rates of return for Australia’s 200 largest superannuation funds and it does not make great reading for Bookmakers Superannuation Fund. It has performed the worst over the past 5 years and second last over 9 years.

We became aware of the fund back in 2006 when a potential client was seriously looking at using the fund after some positive reporting including from Alan Kohler.  To be fair the fund had provided some strong returns in the years to 2005 and had a low fee basis. (The fund became publicly available in September 2004.)

Unfortunately if you had joined the fund after it went public the results have been disappointing.  If you serch for why returns have been poor a major reason was that the fund had a heavy exposure to investments held with MFS which failed in 2008.

This story reminds me of the Legg Mason Value Fund in the US.  For 15 straight years through to 2006 the fund outperformed the S&P 500 index.  In the five years later following it trailed the S&P 500 by more than an average of 7% per annum.

The clear message from both of these stories is to be very careful "chasing" active fund managersand advisers who report strong historical returns.  History also shows us that keeping this performance going is extremely difficult.  If you get in at the top of the wave you are potentially heading for a huge dumping.

The following editorial piece was published in Monday's Advocate newspaper by Peter Mancell, the Managing Director of FYG Planning Pty Ltd, in Peter's capacity as director of the Mancell Financial Group and director of FYG Planning.

Peter regularly publishes opinion pieces in The Advocate and I thought this one was well worth republishing here.  In this week's piece Peter talks about the Bookmakers Superannuation Fund along with a really interesting story out of the UK where a cat has beaten stockbrokers in a stock picking challenge over a 12 month period.

I hope you enjoy the article.


Bookies Finally Lose, While Cat Beats Brokers
Given the self important and often overpaid nature of the finance industry, each week often throws up at least one irony.
Last week there were two.
Firstly, APRA released the rates of return for Australia’s 200 largest superannuation funds.
The number one fund over the past five years was the Challenger Retirement Fund, while over nine years it was Goldman Sachs/JBWere’s corporate staff fund.
Of course as interesting as who finished first, is who finished last.
For those who’ve lost a little too much money on the horses over the years, they’ll be interested to know the Bookmakers Superannuation Fund came last over five years, and second last over nine years!
Between June 2008 and June 2012 the Bookmakers Superannuation Fund failed to have one positive yearly return.
I don’t know what their strategy is, but by the looks of it they might have done better ‘investing’ at the racetrack!
Secondly, the news out of England that a cat named Orlando managed to beat stockbrokers, fund managers and a group of schoolchildren in a stock picking challenge.
At the start of 2012 each group invested a hypothetical £5,000 in the FTSE (UK share market); the groups were allowed to revise picks every three months.
Orlando picked his stocks by throwing a toy mouse onto a numbered grid, while the experts used their knowledge.
After 12 months, Orlando’s portfolio had grown to £5,542, the experts’ portfolio to £5,176, while the schoolchildren’s portfolio fell to £4,840.
While the schoolchildren finished last, they did perform the best in the final quarter which led to some misplaced optimism from their deputy headmaster, Nigel Cook.
“We are happy with our progress in terms of the ground we gained at the end and how our stock-picking skills have improved,” Mr Cook said.
Despite his students being shown up by a cat, Mr Cook still missed the point of the exercise.
Stock picking remains futile and you can’t ‘improve your skills’ at it because no one can predict financial markets with any certainty.
Peter Mancell is a director of Mancell Financial Group and FYG Planners AFSL/ACL 224543, This information is general in nature and readers should seek professional advice specific to their circumstances.
Mancell Financial Group
First Floor, 10 Wilson Street, Burnie TAS 7320| Tel: (03) 6440 3555| Fax: (03) 6440 3599 | email | Web:
Mancell Financial Group ABN 29 009 541 253 is an Authorised Representative No. 226266 and Credit Representative No. 403187 of FYG Planners Pty Ltd, AFSL/ACL No. 224543

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