1. Active managers don't beat the index
BALANCED pooled funds saw median returns of -0.1pc in the third quarter of 2007, latest CAPS figures from BNY Mellon Asset Servicing reveal.
The performance measurement firm said this was the first time in 12 months that balanced pooled funds had failed to achieve a real rate of return – as the retail prices index increased by 0.3pc over the same period.
However, balanced funds achieved a return of 11.5pc in the year to September 30; and 15.0pc per annum and 14.2pc per annum in the three and five year periods to the same date.
The poor performance was blamed on “the majority” of active pooled fund managers who failed to outperform their respective indices in the third quarter.
2. DC scheme members don't want choice
TOO MANY investment choices turn defined contribution scheme members off saving, a report by Barrie & Hibbert warns.
The financial risk consultant’s report – Managing investment choice in DC pension schemes – shows that participation rates in DC schemes drop with the introduction of greater choice.
It said in schemes with two fund options, average take-up rates were 75pc – compared with 65pc participation in schemes with 40 fund choices.
The report also noted statistics from the National Association of Pension Funds which show 94pc of DC savers opt for their scheme’s default fund.
Things to bear in mind next time you hear a fund management marketing drone tell you why your DC scheme needs loads of fund options, based on past actively managed portfolio returns...