Show Notes
Active fund managers have teams of analysts researching companies, watching markets and deciding exactly what their funds should buy and sell.
If anyone should be able to beat the market, surely it is them.
Yet over 15 years, 89% of active Australian share funds failed to do it.
It is a result that challenges one of the most tempting ideas in investing: that more research, more activity and more expert decision-making should produce better returns.
So why does a far simpler investment strategy keep coming out ahead? And what could that mean for the way you are building wealth?
In this episode, Nick and Paul unpack why trying to beat the market can leave investors further behind, and why the latest results strengthen the case for the index-at-the-core approach we favour at Guidance Financial.
They also look at another risk many investors miss. You could own hundreds of companies and still have far more of your wealth riding on the same industries than you realise.
Inside this episode:
Why so many professional fund managers struggle to beat the market
The small group of shares that can have an outsized effect on returns
What investors risk missing when they try to choose the winners themselves
Why a portfolio can look diversified without being properly diversified
What Australian investors may be missing by staying close to home
Why international investing involves more than spreading money between countries
Whether a simpler investment approach could give you a better chance of reaching your goals
At Guidance, we use an index at the core approach. We help clients decide how their investments should be structured, where they should be held and how they fit with their income, super, debt, tax position and long-term goals. You can learn more about how we manage your money here. Are You in Your 30s or 40s and Ready to Make More of Your Money?
If you're earning well but unsure whether you're investing enough, using super wisely or making the right moves, Wealth Builder can give you a clear plan for turning today's income into long-term wealth. Learn more here. Visit our website here: https://www.guidancefs.com.au/ and you can also find all our links here.
General advice disclaimer
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UPDATED: This episode was originally published with the wrong episode audio; it has been republished with the correct audio. Thanks for your patience!
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