DIY Investor Magazine
/
March 2014
23
NEGLECTING TO MONITOR
If you are going to invest in an actively managed fund look
at the historical performance of the fund and the career
track record of the manager currently responsible for it –
the number of column inches devoted to the launch of Neil
Woodford’s CF Woodford Equity Income Fund has seemingly
afforded him rock star status.
Once invested, you need to be aware of any potential
changes that could impact future performance, such as a
change in key personnel or dramatic changes in the size of
the fund.
The DIY investor needs to do their homework prior to
making an investment but ongoing monitoring is essential
– some establish a regime for reviewing the balance of their
portfolio but ongoing research and setting alerts can ensure
that there are no nasty surprises.
NOT REBALANCING
However carefully constructed a portfolio is it is vital that
the DIY investor monitors changes over time and periodically
rebalances their mix of investments to bring it into line with
its original parameters.
Over time, the performance of funds and asset classes will
vary, meaning that the original asset allocation will drift,
potentially resulting in the portfolio changing risk profile.
An annual review may suffice but it is important to ensure
that at any given point the balance of the portfolio is
appropriate to deliver the objectives that shaped it in the
first place.
Self-directed investing is not for everyone and however
affronted some may feel by the fact that the ‘free’
advice they received pre-RDR was nothing of the
sort some will prefer to bite the bullet and pay for
professional guidance.
However, for those wishing to dip a toe in the
DIY water there has never been more education,
information and community support available and
the application of common sense and discipline can
safeguard against the most often seen mistakes that
negatively impact investment performance.
IF YOU ARE GOING TO INVEST IN AN
ACTIVELY MANAGED FUND LOOK AT THE
HISTORICAL PERFORMANCE OF THE FUND
AND THE CAREER TRACK RECORD OF THE
MANAGER CURRENTLY RESPONSIBLE FOR
IT – THE NUMBER OF COLUMN INCHES
DEVOTED TO THE LAUNCH OF NEIL
WOODFORD’S CF WOODFORD EQUITY
INCOME FUND HAS SEEMINGLY AFFORDED
HIM ROCK STAR STATUS.
