This a fascinating two-part post by Andrew Hallam, author of Millionaire Teacher, of a particular case examining whether an advisor added value. Much can be learned, especially in the exchange presented in the second post.
The practice of reporting comparative results by not including dividend reinvestment on the part of the advisor is especially disturbing. Unfortunately, it points up the fact that everything must be questioned.
Always look for consistency in performance. That's why I take annualized returns with a pinch of salt. A fund could perform badly for a number of years and hit jackpot just once to smooth the negative effects. I wouldn't want to invest in such funds.
ReplyDeleteGood point. You definitely have to know what you are looking at when examining performance numbers!
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