Posts tagged as costs

12 Jan 2006

The Cost Wedge: an American perspective

My professional body’s journal (Financial Analysts Journal) this month includes an article by John Bogle of the Vanguard mutual fund group in America. Bogle is unmatched in the UK. We have no top executive within financial services who has demonstrated over an entire career a dedication to the interests of the customer as the very basis of professional stewardship of money. A deeply old-fashioned philosophy, it has been repaid handsomely in Vanguard’s steady growth in market share for the past 30 years.

read more Commentary by Stuart Fowler
06 Nov 2005

Trackers: winning the long game

An FT letter writer recently described tracking a stockmarket index as ‘a race in which the athletes absurdly strive for an average performance’. This is a common misconception, arising from extrapolating short-period relative returns (where the description fits) to long periods. In fact, at some time horizon the lowest-cost trackers are bound to achieve significantly better returns than the average actively managed fund.

read more Commentary by Stuart Fowler
03 Aug 2005

The lifetime challenge of funding your own retirement

It is changes in society and government policy rather than economics or financial asset performance that make lifetime financial planning different for today’s generation of young people. For those with expectations of near-average lifetime earnings, the challenges are not necessarily so different. But for young people with higher expectations, the changes are pretty dramatic. Almost regardless of how entrepreneurial are their expected income sources, they are likely to have to plan their earnings and retirement income as if they were running a business.

read more Commentary by Stuart Fowler
06 May 2005

The cost wedge just got fatter

Most personal finance sections have recently converged on the story that several large fund management houses are pushing up annual management charges again. This is an inevitable consequence of consumers using more agents, including the internet, to avoid or cut front-end loaded sales commissions. The effect is that more of the commission payments from providers to distributors must take the form of a share of the annual management charge, making distribution costs more equal across different types of fund and the ‘cost wedge’ harder to avoid.

read more Commentary by Stuart Fowler
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