Dragon or Yes Man: what type of investor are you?
Active managers can be selective
Have you ever watched Dragon’s Den, where hopeful participants pitch business ideas to panel of millionaire entrepreneurs, seeking financial backing?
Each entrant is systematically grilled on every aspect of their business, on sales, revenues, the growth forecasts, environmental impacts.
If they pass that severe scrutiny, they may win an investment.
Imagine instead, that every company coming into Dragons Den was guaranteed to win an investment. Imagine the Dragons had to back every single company, no matter what it’s prospects.
That image strikes me as the choice many investors face today – between ‘active’ and ‘passive’ investment options.
Dragons are active, not passive
An ‘active’ fund manager, is like one of those Dragons – and at Martin Currie Global Portfolio Trust we are active equity investors and we specialise in analysing companies.
We assess a long list of fundamental criteria to identify the highest quality growth prospects – and we only select the best ideas for our portfolios. After all, if we are seeking to invest for 5-10 years or more, we want to have the highest levels of conviction.
However, you may have heard about a rise in ‘tracker’ funds which aim to replicate the returns of a market index like the FTSE100.
Most indices include stocks based simply on their size, known as market capitalisation, so they can contain a real mixed bag of companies. Some may have a very promising future but many will be past their best and on the way down. Most are run by computers and automated and that is a key factor in their low cost.
No guarantee – it’s your choice
There’s no guarantee that an active manager will beat the market trackers but I firmly believe that identifying and selecting high quality companies offers the best opportunity of outperformance.
I believe that the research we undertake can help us to pick the world’s leading companies and avoid the worst. And a ‘global’ portfolio, like Martin Currie Global Portfolio Trust, offers the widest opportunity set of all.
A tracker has no such discretion.
So, the next time you are selecting a fund to invest in – will you be a Dragon?
Information correct at time of publication. This information is issued and approved by Martin Currie Investment Management Limited. The opinions contained in this article are those of the named manager. They may not necessarily represent the views of other Martin Currie managers, strategies or funds. Market and currency movements may cause the capital value of shares, and the income from them, to fall as well as rise and you may get back less than you invested.
Martin Currie Investment Management Limited, registered in Scotland (no SC066107). Registered office: Saltire Court, 20 Castle Terrace, Edinburgh EH1 2ES. Tel: 0808 100 2125 Fax: 0870 888 3035 www.martincurrie.com. This company is authorised and regulated by the Financial Conduct Authority. Please note that calls to the above number may be recorded.