I blame the fund managers

October 13, 2009

I’ve been building up a couple of dummy funds on Reuters’ new Portfolio tool. Not only is it a welcome diversion from actual work, but it allows me to test the mettle of the fund managers we speak to, and check out the guidance offered by the Lipper Leader fund rankings.

One of my portfolios uses the stock picks and short ideas offered up by the managers we interview for the many FUND VIEW stories which dot the Reuters wire. The other simply picks some of the funds which score highest across the Lipper fund sectors.

In theory, it gives me ample room to lay blame elsewhere when the dummy funds inevitably go belly up and I’m forced into a fire sale of assets to repay my dummy investors with dummy money. In truth though, I’m going to set the asset weightings and decide when to buy and sell so any abject failures will be more fairly laid at my door.

The early results, in fact, are pretty encouraging.

The Fund Viewer stock picking portfolio has delivered me a comforting 8 percent return since I put it up on Sept 25 (my wedding anniversary — must be a good omen) and that’s with a ridiculously cautious 36-percent weighting in cash, as well as some equally ridiculous single-stock exposures caused by misreading the denominations. (That little ‘p’ is pence folks, big ‘P’ is pounds)

My Fund Leaders fund of funds has even less of a track record, but has still managed close to 2 percent returns since Oct 6.

Both funds are outperforming the FTSE Europtop 100 index, my chosen benchmark, by more than 18 percent on a three-month view. I’ve not exactly been scientific about choosing the index, but fortunately my dummy investors have notoriously poor due diligence standards.

Get on to the portfolio page, see if you show up my performance record as a painful underachievement, and try to top the Reuters Portfolio league.

Doubtless the FSA would like me to point out that the value of investments can go down as well as up. Mind you, anyone not conversant with that little peccadillo of the markets has either been asleep for the last year and a half or houses a memory so short-term they may well have forgotten the first half of this paragraph anyway.

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