Much like the seductress at work, celebrity fund managers can be a trap wrapped in gloss and glitter, cautions <b> ‘36 Stratagems for Investors: Timeless financial wisdom from a Chinese classic’ </b>brought out by HSBC Jintrust Fund Management (www.wiley.com).
“Celebrity fund managers build their credit on having scored excellent results and won numerous accolades in the past. That convinces investors that these celebrity fund managers will continue to churn out top-notch results, and turn a fund on its head to make its way up to the top spot in the ranking, regardless of market turbulence or how badly hit a fund has been.”
Apart from delivering exceptional results, a celebrity fund manager is also thrust into the limelight by the sleek packaging of a professional marketing team and media exposure, the book alerts. “The outstanding work done by a fund research team is also, to a large extent, behind the success of a fund.” Hence, the investors should focus on the investment research team.
Another ploy highlighted in the book is the need to observe the fire from the opposite shore, that is, be objective about the fund’s performance. For instance, “A new fund in its infancy may not have a sizeable ratio in its holdings, thus causing it to experience sluggish net asset value growth, and appear inferior to its older counterparts.”
Adopt a medium- to long-term perspective when investing in funds, the classic counsels. “As the Chinese saying goes: ‘A horse will prove its strength over a distance, just as a person’s real character will be revealed over time.’ So, have patience.”