Wealth manager HFM Columbus has warned investors to be cautious on last year's top performing funds, as many will struggle to achieve in 2008.
HFM Columbus, the Hoyland Financial Management and Columbus Financial Advisers joint venture, is urging investors to use managers with a mind of their own, to avoid ‘trend’ followers.
Rob Pemberton, HFM Columbus’ investment director, has concerns on new funds operating in heavily marketed sectors such as emerging markets and commodities.
“Investment firms frequently work on the principle of ‘if the ducks quack, feed them’ and aggressively promote areas of the market that have performed strongly - often launching new funds into areas they perceive as easy sells to less sophisticated investors,” he says.
“Markets ‘climb a wall of worry’ remember, so if an investment is claimed to be an obvious slam dunk then the game will already have moved on somewhere else.
“A good example is the craze for commercial property in 2006 – and we all know what happened there.”
Pemberton says investors should continue to search for value rather than momentum and hype.
“In the long only space we have long admired the individual thinking of the likes of Neil Woodford at Invesco Perpetual and Robin Geffen at Neptune,” he says.IFAonline
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