In the Australian Financial Review on Wednesday, there was an article about managed fuds that had delivered strong results.
Two of the five Australian fund managers mentioned were Vanguard and Dimensional, fund managers we use widely. This was a nice endorsement of our investment process.
The other three funds were active fund managers. Two of these three funds had exactly the same top five shareholdings as the index. That is, even though they charge big fees to actively find the best investment opportunities their biggest five holding were EXACTLY the same as the index! (All were BHP and the big four Australian banks - the 5 biggest companies in the market at the moment).
Surely that is not what an investor is looking for when they invest in an active managed fund - they want a portfolio that looks different from the index!
We'll stick to the sound and transparent performance offered by Dimensional and Vanguard funds!