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Oppenheimer Holdings Inc. Message Board

  • jonathanjon5656 jonathanjon5656 Dec 4, 2011 2:27 PM Flag

    Next time, don't Waste your MONEY !

    On the wrong services.

    http://m.cnbc.com/us_news/45524957/1

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    • It all depends what yardstick you are using to measure active managers’ performance. I just hate these oversimplified analyses that come up with an ambiguous number according to what story they are trying to make…Perhaps they underperformed their peers and are trying to blame active management for it? Just sayin’

      I haven’t seen the details of this analysis, and it would be nice for the author of the article to supply the figures used, but these generalizations usually compare apples to oranges…

      They usually compare the managers’ client specific-total fund-net performance vs. the non-investable total return-gross performance of the index…

      First, these analyses use the gross returns of the index vs. the net returns of the manager…in the real world you and I know that this gross return is not investable! There is no such thing as a fee-free investment. No matter if it is an index fund or ETF or whatever, whether it is a large fee or a small fee, the point is, there is always some fee associated with any investment.

      Second, you are comparing a passive investment vs. a client specific experience i.e. a client might not want income to be reinvested, this is not under the manager’s discretion, and it might end up hurting the aggregate performance of the manager’s composite.

      Third, the analysis looks at the total investment performance of the manager (including the small cash positions held). This might sometimes be in favor but it’s mostly against active management. Shouldn’t the comparison be done just at the investable assets’ level?

      So again, it all depends what yardstick you are using to measure manager’s success. Someone could potentially construct an analysis comparing numbers: Gross of fees, without the impact of dividends, just for investable assets and find that large cap managers outperformed the index over 70%vs. the underperformance found in this analysis….and if they want to take it a step further, they can also look at the risk characteristics of the managers vs. the index and find that their returns are higher while taking on less risk...

      So next time, don't waste your time and ours with these articles before you have all the facts...

      • 1 Reply to superbmomentum
      • lol. You're very funny. Why do you need an elaborate analysis for an article that was brief and which made a simple point ?

        That is, when the markets fell steeply months ago, one could've bought shares , on one's own, of an index, such as SPY or EFA . . . and simply waited for the markets to recover, to sell and make a profit.

        However, many money managers had recommended to their clients stocks that did not recover as the markets rebounded, and so those investors lost out BIG time, both in terms of the performance of the stocks in their portfolio, and the high commissions charged by their money managers.

 
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