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What about performance on new funds?

The 50 per cent fall in value of Aberdeen&#39s zero-dividend progressive growth fund over its first year does raise a question or two about the efficacy of the standard risk warning “past performance is not necessarily a guide to future performance”.

The issue in this particular scenario is – what past performance? Of what value or relevance is a risk warning prescribed by the regulator which has no relevance at all to the fund or investment in question? None at all as far as I can see. Or hasn&#39t this occurred to anyone at Canary Wharf? Apparently not.

One of the procedures drummed into us by our network from the very earliest days of our membership is that recommendations to a brand new fund must be supported by considerably more information than a recommendation to a fund with a track record of upwards of five years. Quite right, too.

Should not a recommendation to a new fund be subject to a quite different risk warning from that applied to an established fund? Common sense would suggest so but we all know that that particular commodity is somewhat sadly lacking in certain quarters.

How about something like “This fund is a new launch and has no past performance on which any estimate or expectation for the future might be based. Future performance may differ substantially and to an unlimited degree from the aims and objectives for the fund as stated in the company&#39s promotional literature.”

Julian Stevens

WDS Independent Financial Advisers, Bristol


Scottish Mutual chief executive steps down

Scottish Mutual chief executive Graham Pottinger is leaving the Abbey National group at the end of June. His departure follows a restructuring of the Abbey’s long term savings businesses. The businesses are being brought in to one division which will be headed up by Mac Millington who was formerly managing director of its business to […]

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Abbey strengthens bond team

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