As you may be aware by now, we are very sceptical advisers.
Due to our independence and having no affiliation with product providers, being sceptical ensures that our clients are provided with unbiased advice which targets their financial requirements at all times.
To illustrate this, please refer to the attached;
You will note that I have highlighted four areas of the product investment fact sheet.
Firstly, the heading. This is an equity fund trying to add alpha (out-performance). A Pure equity fund in fact. Which to me suggests that it trades in shares trying to actively beat an index.
Secondly; the performance of the fund. Over a 4 year period it has produced a return of 7.76% per annum and beat it’s benchmark by 5.43%! This is impressive.
So thirdly; what is the products benchmark? The RBA Cash Rate! WHAT?!
And lastly, the management cost associated with this product which is 1.28% PLUS a performance fee. This manager outperformed it’s benchmark (the cash rate) by 2.33% which means they more than likely received additional fees over the year.
Perpetual are certainly not the only manager to pull this trick. It’s quite common actually.
A more relevant benchmark would be the ASX 300 Accumulation Index, which over the 4 year period highlighted has produced a return of 9.44% per annum. If this benchmark was used by Perpetual for this product, they would have under-performed by close to 2% per annum. But, how do you sell that?
We will be closing our office doors from today, the 22nd of December through to the 9th of January 2017. Wishing everyone a wonderful Christmas break and a Happy New Year.