Missing the point
Ihave no desire to get into a slanging match nor do I have the research capability that asset managers do, but I think that Clyde misses the point of the article. There is no disputing the fact that the Investec Opportunity Fund has delivered excellent (historic) returns, but these have been while the fund was signif icantly smaller.
A quick look at Morningstar f igures shows that his fund was just over R11bn two years ago (October 2010).
The figures also show that it has more t han doubled i n size i n t he past 24 months while the historic return over the period is around 15% per annum. This means that much of the increase in size is due to inf lows (probably as a result of the excellent past performance).
While there is no denying the past performance the article and research suggest that it will be difficult to maintain the degree of outperformance going forward and a quick look at the past three years’ returns from the fund suggest that this may in fact be the case.
In fact, if one looks at the recent returns of the funds mentioned in the article (ie since they have become “huge”) then the recent ret urns seem to support t he research. The notion of a “consistent winner” is also f lawed.
The “consistent” winner is only available after the fact (and not before the time).
Look at the recent performance of the past “consistent” winners – they have almost all performed below the average (in fact I remember reading some research a while back that suggested that you would be better off following a strategy of investing in the worst performing fund each year than the best performing one.