Articulating Clear, Specific Fund Objectives

Asset managers must work harder to help clients understand the objectives of their funds

Morningstar Manager Analysts 23 April, 2012 | 3:17PM
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It never ceases to amaze me, after 25 years in this industry, how vague the majority of fund objectives are. “Aims to achieve capital growth from investment in UK equities” is the stated objective of a highly regarded fund. “To maximise total return while generating a high income” is the explicit aim of another. These are helpful if one is somehow confused as to whether one is buying a mutual fund, a car or groceries.

But if one is trying to plan or save for a future expense, then these objectives are of limited use. For starters, one has little idea what to expect. Will the UK equity market double, treble or halve? Over what time period? How does that help anyone plan for the known quantity of paying school fees, daughters’ weddings or an income in retirement? On top of that, what is being offered relative to the asset class when one is committing hard earned cash?

The fund industry as a whole should always be trying to help investors understand what they are being offered, what it costs and what they can expect in return. It is this last point in particular that I wish to address in more detail.

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Morningstar Manager Analysts

Morningstar Manager Analysts  research and rate hundreds of OEICs, unit trusts and investment trusts available for sale in the UK.