I did some research of my own.
What I discovered was shocking.
Even considering their lower costs – they couldn’t beat even the highest cost competitor I looked at.
What are the costs of ‘low cost investment funds’ really?
Sygnia’s Skeleton 70 Balanced fund is by far the cheapest option when it comes to fees. It charges a mere 0.63% of total costs. But the fund’s performance wasn’t that great over the last year, three years or since it started out…
10X is another low-cost provider – with a 1.23% total fee.
That puts it in the middle of the pack. Coincidentally, it also performs roughly in the middle of the four funds.
The two traditional asset managers, Investment Solutions and Allan Gray have roughly similar performance for their funds. They also charge the highest fees by far.
But here’s the thing, on a three-year basis, both high-fee funds still outperformed the low-cost fund by around 1%.
Now I know – this comparison doesn’t look at all the funds out there. So, it can hardly be called scientific.
But the fact I’m trying to bring across here is that you shouldn’t be fooled by the ‘low-cost’ marketing angle.
Low costs alone are not a sufficient reason to invest in an investment fund.
The fact is that there are investment funds out there that have proven their long-term returns are above average and consistent. And, they can outperform low-cost, passively managed funds by a wide margin.
Here’s to unleashing real value
Francois Joubert
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