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Virgin says trackers are better in a bear market

Virgin Money is slamming UK fund managers, saying their performance

is worse than the stockmarket and inv-estors are better off in a

tracker fund during a bear market.

It bases the criticism on its annual report from research consultancy

WM Company which analyses monthly unit price returns in the UK all

companies sector from 1982 to 2002 using the FTSE All-Share index as

its benchmark.

The research shows that 60 per cent of active funds managers failed

to beat the index last year and only once in the last 15 years, in

2000, has the average fund manager done better than the market.

Over the 20-year period covered by the report, called Comparison of

Active and Passive Management Unit Trusts, 80 per cent of fund

managers performed worse than the market.

Director Gordon Maw says: “Even most funds managers admit that

tracker funds are hard to beat in a rising market. However, the myth

has persisted that a fund manager will give you better ret-urns in a

bear market. We now know that tracker funds beat the majority of fund

managers, whichever direction the market is heading.”

IFA Simpsons of Brighton partner Andrew Merricks says: “I disagree

completely with the view that people should have a tracker when the

market goes down.

“They should work harder to find a good fund manager who is allowed

flexibility to beat the market.”

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