We have a safety-first approach at Blueberry Financial when it comes to managing your money. This is because it’s our belief that nobody should ever be reliant, investment-wise on any one person, but rather on a system. That system begins with the idea that over time, markets will reward all patient investors, particularly if they focus on those factors they can control, such as keeping costs low and only taking risks that are reliably rewarded.
It’s this way of thinking that leads us, as advisers; to the particular people and organisations we select to manage your money. We like to go for those who, in the nicest possible way, are interchangeable. In other words, the success of the fund is broad-based and proven, it’s not dependent on any one individual invested with ‘star status’.
If you’ve a moment, let me tell you a story about an investment management company called Pimco. Whilst this isn’t a well-known name in Europe, it is, in fact, one of the biggest investment managers in the world. However, no path ever runs completely smoothly and within the past year, two high-profile ‘star’ members of the investment and executive team have left the firm. The departure of these individuals has directly contributed to investors pulling money from Pimco’s funds. In one month alone, investors withdrew $23.5bn from their flagship bond fund. Yes, you read that right $23.5bn, from one fund, in one month.* Not good news, not good news at all!
Something very similar occurred in the UK when the manager of one of the country’s largest funds announced he was stepping down, which immediately prompted investors to pull out £2bn.**
Both these cases illustrate all too painfully the enormous faith investors are prepared to place in individuals who look after their money. However, in placing total faith in one person there’s always a risk that circumstances can suddenly change. If the faith has been only in that individual, then investors are left feeling understandably nervous. They may feel they have no choice but to switch to other funds – where they may again make the same mistake of buying into the legend and reputation of charismatic and clever individuals, rather than the overall solidity of the organisation. It’s always worth bearing in mind that organisations are likely to be there, long after any ‘heroes’ have moved on, and nobody is irreplaceable. Hence our tried and tested safety-first approach based on systems not ‘stars’.
*http://www.ft.com/cms/s/0/a7be468a-49b2-11e4-80fb-00144feab7de.html?siteedition=uk#axzz3Etwe4rir
**http://www.telegraph.co.uk/finance/personalfinance/investing/10505379/Investors-pull-2bn-out-of-Woodfords-Invesco-Perpetual-inc
