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Nice guys, shame about the fund

I am bemused by all the reports appearing of late about the FSA wanting to


take past performance out of the equation when an adviser is trying to


formulate a recommendation to an investment product.


The question yet to be answered by anybody, as far as I am aware, is just


what does the omniscient FSA suggest we use in place of past performance as


an indicator for the future?


Perhaps that the fund management team is a nice bunch of guys and they


have all got university degrees? Or that the team has a good gameplan? Or


that they have all been in the industry for a good few years?


Will the fact that they may not have yet actually delivered anything in


the way of out-performance be allowed to have any bearing on the matter?


Will it be permissible for the adviser to ignore the fact that the


performance of all the funds they have managed so far may have been


consistently and resoundingly crap? Or are we expected now to become


analysts of fund management teams?


Past performance may be no guarantor for the future but from where does


the FSA get the idea it is of no relevance whatsoever? I believe misleading


is the word they like to use. Does pedigree count for nothing?


If I am going to bet on a horse, I want one that has won a few races


already, even though this can be no guarantee it will win on the day. When


I am looking at buying a car, my inclinations are towards one with a proven


reputation for superior performance and reliability.


When I buy a hi-fi, I tend to prefer an established (not necessarily


mainstream) brand recommended by experts who have used it. I could go on


but you get my drift.


Maybe the industry has been overdue for a shake-up but don&#39t you think


that turning it on its head and throwing logic out of the window is taking


things just a bit far?



Julian Stevens


Partner,


WDS Independent Financial Advisers,


Kingswood, Bristol

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