Fund Managers Under Pressure as Low-Cost Trackers Gain Popularity
Tuesday 23 July, 2024 – Wealth managers are facing increasing pressure as low-cost trackers gain popularity, putting their future existence into question.
According to a recent report by Bestinvest, over 80% of wealth managers underperform simple market trackers, yet investors continue to trust them with their hard-earned capital and wealth.
Bestinvest’s yearly “spot the dog” list, which exposes underperforming funds and wealth managers, is a dreaded feature for many in the industry. This year’s report showed a 170% increase in the number of “dog funds” since August 2023, with a total of 151 equity investment funds holding £95.26bn consistently underperforming.
In order to make it onto the list, a fund must have underperformed its market by 5% or more over three consecutive years. This year’s report also highlighted the increasing number of global equity funds on the list, with 49 included compared to 24 in August.
The report also revealed that two prominent fund managers, Terry Smith and Nick Train, saw their funds, the Fundsmith Equity and WS Lindsell Train UK Equity funds, enter the list for the first time.
However, amidst this underperformance in the industry, two industry veterans may have a solution for frustrated investors. Edward Davies and Lane Clark, who operate away from the hustle and bustle of the City in Stamford and Cambridge, have built a platform known as TPP that aims to bring “market-beating” products directly to the marketplace.
TPP provides access to experienced traders and their trading strategies, including leveraged trackers and “long or flat” and “active” strategies. The platform has seen exceptional performance since its inception and does not charge management or performance fees, providing a potential solution to the outdated wealth management model.
Will TPP disrupt the traditional world of wealth management? Only time will tell.
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