There are two huge issues facing the fund and portfolio management business at large are the high fees they charge and the inconsistency of their portfolio returns. Fees are a killer and at recent high levels they have had a huge and detrimental effect on the portfolio values of their clients. Portfolio returns are a very topical subject at the moment but Stockradar research shows the financial industry is not providing, with their active and passive offerings, what is needed. Clients are being brainwashed into thinking that “active” or “passive” are the only alternatives and that has become quite entrenched in common thought. Investors have become frustrated by the under-performance of these offerings and the attendant high fees. Happily, there is another alternative, one which is aimed squarely at the end-user rather than the provider.
The key issue is how to run a profitable portfolio, and not just for one good year but also consistently over time and this should not be dependent on market performance. Steady wealth creation is what we need and this can be achieved. The current offerings of passive or active don’t give us what we want. They’re too volatile and often matched to market performance when they needn’t be. The majority of actives don’t achieve their stated aim of out-performing the market. A consistently out-performing active is rare and the fees are often at the high end at around 1% plus. Up to 60% of active funds don’t deliver over one year and if we stretch that out over 5 years we find as much as 70% are under-performers! 
The success of a passive approach is market dependent. Where the market goes you will follow and you will pay fees for that ‘feature’. This may suit some time poor, agnostic investors but at roughly 0.5% in fees this is still too high because there is no work involved apart from buying stocks in your ETF to reflect the market action and fund flows. It’s a no-brainer, a computer can do it, and it’s a huge money generator for the providers.
The two approaches above of active and passive are for the benefit of the manager not the end-user – which is you. An active manager will tell you they outperform if they go down 19% and the market drops 20%. True, but it doesn’t help us. They have little respect for capital protection as they focus squarely on index performance and that goes up as well as down. But that’s not the only choice. In fact in this business smaller is better – *it’s just that the biggies can shout a little louder and often it is the new investors that rally to the call. It’s not their fault but they know no better. There are managers out there that actually make good money on their stock market investments but these aren’t pigeon holed as active or passive. When people ask me about my investment philosophy, I do not like to be pigeon-holed. My portfolios may hold a mix of value or growth stocks. Since our models portfolio’s have an absolute return strategy, my objective is how I can maximise upside returns while minimising downside risk for my clients.
Stockradar’s approach requires discipline and control. It is built on a solid and tested methodology for generating profits and managing risk that delivers steady growth in equity regardless of market performance. It is an absolute strategy and is suited to you the end-user because of the stated objective – to grow your capital year on year with a big focus on capital preservation. For this ‘safety net’ approach you may trade off some upside but most can live with that in the name of capital preservation. Capital preservation is a must for the SMSF manager or in fact any cautious investor.
Stockradar aims to equip its clients for success in the following ways:
- The provision of a solid flat fee two-tier trading plan.
- A clear focus on cost-minimisation strategies, which are inherent in both trading plan structures.
- For those clients who have an SMSF, Stockradar has an arrangement with a registered accountant who offers a very competitive flat fee for all your SMSF accounting and auditing requirements.
Stockradar provides two levels of service:
The basic service provides a model-trading plan covering 160 stocks. Guidance and live examples on the website applying all the necessary elements of a successful trading plan are offered here.
The portfolio service is a personalised service aimed at assisting members to understand how to build and run a diversified, controlled and properly risk-managed portfolio using Stockradar’s 160 stock universe as a source of stocks. The portfolio service is intended for those clients who would like a more assisted pathway to success.
For my members the portfolio service is priced more than competitively at a flat fee ($1495) for any portfolios under $1M and we now have arranged to work with a registered Australian SMSF accountant who offers a very competitive flat fee for completing all your SMSF needs. This compelling combination is available to you now.
Now is the time to take control of your stock market investments and keep your retirement objectives safe.
 * Ref. Dow Jones Indices versus Active Australian Scorecard.