You will often see me publish our Chorus Balanced portfolio in my newspaper articles, and I make a point of publishing it throughout all market conditions. In the recent market crash, it lost around 10% but since then it has recovered well and is 5% up over a 12 month period. It was one of my recent articles about our portfolio that prompted a few non-Chorus clients to contact me as they were concerned that their portfolios had lost much more over the same period.
I am certainly not one for picking faults in other advisers and the investments they choose for their client’s portfolio’s, and whilst I admit good advisers are limited here on the Costa Blanca, there are some good ones out there. I am also not one to brag or take any satisfaction from anyone making unnecessary losses in this unfortunate time.
What upsets me and angers me the most is that I continue to see portfolio’s that are filled with underperforming funds that have eye watering charges. These two things are a recipe for disaster and can often go undetected when the markets are performing well. One couple that contacted me this week said that they had been quite happy with their financial adviser over the years and although they hadn’t made huge gains, they hadn’t lost either. When I looked at their investments it was clear to see that portfolios were made up entirely of ‘exclusive’, ‘in house funds’ which charged them over 2.5% per year (that’s over double the industry standard) and the performance of these funds was shocking compared to other independent funds within the same sector. To make matters worse, these funds had not offered any protection in this recent market correction, in fact these balanced risk clients had seen their portfolio drop by over 20%, and I was not holding out much hope that they were going to recover these loses unless they made urgent changes.
Luckily for this couple I was able to move them into funds which were far superior, had a proven track record and was a fraction of the cost and I have every confidence that these changes will give them the best opportunity to benefit from the recovery.
So why does it happen? Why do advisers choose funds that have a history of poor performance and charges that are nearly double the industry standard? I’ll tell you why, it is because they are financially motivated to do so.
If you are concerned about your investments and would like a second opinion, email me firstname.lastname@example.org or call 693 107 044.