Those Star fund managers

[selkirk]

Recently there was an article in Barrons about value manager Bill Ostein. He runs a group of funds one that trades is OFALX. it is decribed as mid cap growth.

he buys stocks that everyone hates or no longer cares for (same thing), anyways the fund did 16% over ten years.

the article stated in 2005 only did 2.8% the manager says it is harder to find undervalue situations.

in the last 5 years returns have not been that great however; 5yr. avg. is 5.76% and so far in 2006 up 2.93%.

so the returns have not been stellar the last five years, and looked up and you would have done better in the index in the last 3 years.

now Bill Olstein is probably a very good manager, (the article probably will atract more investors ) however the mer is 2.17% so most of the returns have been eaten up by what the fund charges.

he also states that he believes in the future a star manager will be a (mutual / hedge ) that can on average make their investors 9-10% a year.

there is a reason that most small investors (or 12 years olds with pocket money) will be able to make better returns than OFALX and other large funds.

1. MER, and expenses. not only mers but profit sharing on the upside of 20%

2. size, I am sorry but when a fund grows over 1.8 billion you can only invest in certain companies.

know of a great jr. small cap company with market cap of $500 million or less, forget it, or not liquid enough to build a position and get out.


in most cases if you could make more than 10% on managed money, 20% is a dream for the most part you to could be "star" manager.

a simple small investor will beat 90% of all mutual fund and hedge funds.....easily.

should state there are some good funds out there but 90% maybe more are over marketed garbage......

thanks
selkirk

 

[dawgball]

I handle the majority of the money for my wife and I, but I keep my son's money with a couple of American Funds. They have been a pretty good investment over the years to date.

I don't remember which week of Barron's had the top mutual funds listed. I believe I remember them being in the top 15 for the past year. The top 10 for the past 5 years. And #1 for the last 10 (may have been 15) years.

I agree that going with a "star" manager is not a good route.

Thanks for posting your take, selkirk.

 

[amhlilhaus]

mutual fund managers have a big handicap compared to small investors, the biggest is the fact they have to anticipate longer term macroeconomic trends, thereby 'betting' on market sectors. then factor in they can only have so much money in a particular stock and they have to buy and sell over periods of weeks to months, contrast that to an individual investor who can find a stock, research it, and buy their position in a matter of a mouse click. then if the market acts funny or their stock starts to tank they can sell just as quickly. other than possibly a retirement plan or you have no interest or talent for picking stocks mutual funds aren't necessarily the best vehicle for your investments, but as in all things you have to be honest about yourself and go with what feels comfortable.

 

[selkirk]

well put amhlilhaus the larger the amount to manage the harder it is to make a large return. many managers actually simply track an index and then charge their management fees.....

dawgball probably is a good idea to have your sons money in mutual funds. a quick way to diversfy and as long as they are performing well.

still have money in 7 funds, they have performed better than the index they track. only have had one longer than ten years. a drip/spp portfolio is also not a bad one to set up for a child. takes little money and small amounts can be added over time. have had one for years,

in my drip/spp stocks /all cdn.
Riocan (real estate trust), bank CIBC,BNS, BMO all available, Suncor (oil sands), Enbridge pipeline (borrowing but yields 3.8% and has returned over 10% since owned it, believe returns will be closer to 5-7%,

CGI (closed end mutual fund, has beaten the index most years, bought at 25% avg. discount now down to 7%).

FAP Austrailia and Asia debt. did not do much with rising cdn. dollar believe will yield 5-8% on avg. my int. bond fund.

all I can think of, also owned some Nortel in a drip/spp and CP.

CP returned over 400% since splitting up, great investment.
Nortel was a mistake should have never owned it in a drip because when the ---- hit the fan, took 3 weeks to sell.....cost me money compared to a brokerage account....


thanks
selkirk