AUTIF is under fire from one of its own members who claims the trade body has failed to protect...
AUTIF is under fire from one of its own members who claims the trade body has failed to protect the public's interest regarding its past performance claims.
Virgin Direct has condemned AUTIF's announcement that there is "conclusive" evidence that past performance figures can provide a robust and reliable guide for consumers choosing investment funds.
Virgin's marketing manager Gordon Maw said: "It would be entirely wrong to believe that AUTIF is presenting a united industry voice on this subject. This independent piece of work is sponsored by Fidelity, Standard Life and Skandia and it does appear some vested interests are now fighting for a desperate rearguard action over the reliability or otherwise of past performance figures."
Virgin argued that half of AUTIF'S eight research papers in the UK show there is no performance persistence and another paper only shows persistence when it comes to poorly performing funds. So, says Maw: "This seems very much at odds with AUTIF's claim that they've demonstrated 'conclusively' that past performance data is a reliable guide for consumers."
Research commissioned by Virgin over the past three years, has repeatedly shown persistency of performance is hard to identify and where it does take place it is short-lived and not predictable.
Virgin's research suggests where any outperformance exists it only lasts, on average three years. Furthermore, the chance of picking a fund on top past performance and seeing it repeat that performance was no better than chance. Picking a bottom quartile fund saw a better than random chance of being top quartile in the future.
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