UK - Only 5% of tracker funds managed to achieve a positive return in the last five years, claims Bedlam Asset Management.
The firm – which operates on a “no gain, no fee” basis – used this data to warn pension funds away from “typical” tracker funds, which it claims only care about the size of a stock and not its profitability, growth prospects or the valuation of the underlying company.
Bedlam founder Jonathan Compton said: “Putting your money in an investment fund that ignores business risk is simply reckless investing.
“The reality is trackers have but one role – as an easy market proxy when you are very bullish. If you can forecast and then be right, you do not need an investment manager.”
He also warned against active funds that are closet trackers, and pointed to research by Bloomberg as evidence – out of 44 active UK funds surveyed last August, 43 contained GlaxoSmithKline, 40 contained BP and 36 contained Vodafone among their top 10 holdings.
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