...Turkeys are voting against Christmas.

Consider the incentives that the professional financial community have to keep us amateur investors fearful of our own ability and resources when the days of information asymmetry are long gone, and with RDR imminent.

The usual statistic quoted is that over 75% of fund managers don't beat their index, particularly when risk is factored in.

Also, investment trusts consistently outperform unit trusts, have lower fees, and are more accountable and transparent, yet our experts recommended very few ITs compared with unit trusts & OEICs: why? because they do not line their pockets with commission.

"Experts beat the market every year"

Don't recall seeing that headline, so why do these "experts" think we should pay an extra layer of fees for another experts judgement(guesswork)? Simple: keeps the readies rolling in and salaries high.

The self-serving bluster of the industry is beyond belief - selecting from the data to support the argument is dishonest. Why does Trustnet publish this guff?

The primary aim of any fund manager should be to avoid losses, which inevitably cause concern, with growth secondary. This maxim was highlighted by Mark Slater, whose MFM Slater Growth Fund has held top spot in the UK Sector over 3 years for a long period. I totally agree with the earlier comment about consistency of management, which applies to a number of Invesco Perpetual funds, such as Neil Woodford's High Income Fund which despite its size claimed top spot in the Uk in 2011. Most IFAs who have focussed on investment business over the years must have a detailed knowledge about the specific needs of individual clients, unlike wealth managers, whatever they are, but are being approached to hand over portfolios. Having looked at the recommended funds in the above article....well! There is an old saying that "Where there'e muck, there's brass" so although it cannot be recommended to "ordinary" investors (and that is before the FSA introduces new rules on the subject of funds regulated elsewhere) one is bound to notice that New Earth Solutions is doing OK with carbon emissions etc in mind, local govt contracts and multiple income streams. Plus Vince Cable liked what he saw in Canford,UK!

Hello Truegrid. I don't know about golden rules because whenever I try to apply one it goes wrong. As a novice and not understanding the jargon you are at a slight disadvantage but that can easily be remedied. As an example of the sort of thing you should be looking for, load the factsheet for M+G Global Dividend. It's only been going for four years but point 1 is it has only had one manager so its performance is down to him. Under "Key Information" you will see "Fund vs Sector". The higher the fund's position (considering the number of funds in the sector) the better. Next to that is a box saying "ratios". Alpha should be a plus number, the higher the better, Beta should be less than 1.5, the lower the better, the Sharpe should be higher than 0.5 and the Info Ratio should be as high as possible.
Click "performance" on the top row and then scroll down to the bottom of the page. There you will find the fund's discrete performance for the last five years. The nearest thing I have to a golden rule is, don't buy any fund that has not done better than its benchmark in at least three of the five years.
Hope this helps.

Thanks, Tiny Clanger for the comments and useful steer. I'll work though the MandG fact sheet and see where it takes me.

Tiny Clanger has hit the nail on the head. As a novice and don't understand 90% of investment jargon but having just retired with a bit of surplus cash I diversified and followed what my father did in 1982 when he retired and last November when the market was low I spread half my non cash ISA allowance equally between 4 different funds. At the time of writing I have a paper profit of about £300. His golden rule, as with the footy pools and horse racing and other gambling was only put in what you can afford to lose. I have only 15% of my money in shares/ funds which I am comfortable with. i can,t avoid paying a fund manager but wouldn't contemplate paying an IFA to make the gamblING decisions on my behalf.
I stand by the adage that too much knowledge is a dangerous thing and am quite happy to gamble myself on intuition and broad indicators. I have learnt from TN, eg buy when others are selling (hence my purchases last November) but would be interested to,know other private investors golden rules for investing.

This article should have "advertorial" written over the top. There is a famous stock market saying: when you give your money to an expert to manage, the expert ends up with your money and you end up becoming an expert.
The fund management industry is designed to extract fees from the end investor. Whilst some funds offer good value to investors, to assume that building your own portfolio is any more "dangerous" (in terms of risk) than handing your hard-earned money over to a complete stranger (whose sole purpose is to extract fees and volume from a client) whacks of blatant scaremongering.

Unfortunately investment is much like horse racing; i.e.it's a gamble. Every week I get letters dropping through my door saying, "I am an ex trainer/jockey/owner and I still have a lot of contacts in the horse racing world. Back this horse, or this horse, you will double your money and you only have to pay me £100/£200/£300 per 6 months to keep the money flooding in." It's usually complete rubbish. I was brought up to take responsibility for my own actions so, when I look in a mirror, I can say that any gains are my good stock picking and any losses are my own stupid fault. I cannot get on with this culture that says "where there's a claim there's blame" and have a go at somebody else for my loss. As far as I'm concerned, it's my money and I am responsible for it.

If I allow an I.F.A or a manager of a multi-fund-multi-asset portfolio to take over investment decisions for me then I am no better off than paying one of these horse racing "gurus" to give me tips. I have no comeback against them if it all goes wrong because they hide behind the "nothing is guaranteed" mantra that covers them against such things. I'll keep doing it myself thanks very much.

I put my faith in Henderson's Multi Manager Active Fund. It's been the worst performing fund in my portfolio. A very expensive fund with very poor performance.

Makes a mockery of this article!

That's what happens when you pick a poor fund with no track record. I chose jupiter merlin income and I've done rather better! As the article says, there's only a handful of top mm and multi asset funds - do the required research and they aren't hard to find.

With regards to the very first comment as an IFA I would question your research as it should be based on performance vs volatility over 3 and 5 years.

P.S. I have just read Thomas MacMahon's article of 06/09/12 "Lack of diversification in Multi asset funds".

With the perceptive comments of the other readers, I think this casts severe doubt on the validity of the argument made in the above article.

The article slightly misses the point. Essentially all multi manager funds and indeed IFA managed portfolios are managed versus an objective like "cautious" or "nearing retirement and will need income".
The world isn't like that anymore, if it ever was. Nobody knows what is going to happen over the next few years and nobody actually knows what is risky, defensive or whatever other characteristic.
An individual managing his or her own money can make decisions specifically related to their own circumstances, not versus some immediately out of date objective agreed with an IFA or restricted by the objectives of some multi manager fund.
The concept of spreading one's estate across a very wide range of asset classes and minimising correlation still applies but the top of the decision pyramid should be the individual, in my opinion.
Oh and as far as I can tell I have done no better or worse than a wide range of potential benchmarks over the last three or more years I have been managing my own estate but it is precisely in line with my cash, income, long term protection, inheritance and all other needs (which I reflect on with my wife about every quarter.

I am at a disadvantage, having never heard of Richard Hancock or the Financial Management Bureau, but I commend him for his efforts to serve the interests of his employers.

If he has any data from his study, many of us will be happy to study them. If all he has is opinions, it will not do.

The same applies to the latest TN findings quoted by the author in support. I seem to remember an article here not long ago, on some previous FE study, with more or less the opposite conclusions. I follow the dictum: hear much and believe little.