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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


WDS Independent Financial Advisers,

Kingswood, Bristol


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