Those astute investors who have their money in mutual funds may be scratching their heads if they recently checked the return of their funds since the start of this year.
Seems like many buyside PMs who pull down 7 or 8 figures for managing your money may not exactly be blowing the doors away.
For years, I have maintained a list of 150 or so top performing (4 or 5 star) large, mid, small cap and tech mutual funds. Overall, the group is barely keeping up with the market averages since the start of the year. The best performing 23 funds on my list have averaged a 7.2% return since 12/31/12. That doesn't sound too bad, but considering these are the creme-de-la-creme who are beating the DJIA performance by just 0.4% and the SP500 performance by 0.9%! One wonders if they shouldn't turn in their keys to the beach house on the Hamptons?
For years, the all knowing buyside have whined about the market going sideways and the public losing faith, so they get a chance to show why they deserve their 8 figure art collections and they are giving us 1% more than Cheetah the dart throwing Chimp?
Well, there are some reasons besides lack of cajoles and their eternal, anal fixation in always trying to find what's wrong with a good story:
One is many fell in love with AAPL and they are now paying the price.
Secondly, while they fully admit that many big bank Analysts are nothing but shills for their banking clients and the hedge fund shorts, see the boss' Forbes article comments from last April, the buyside keep on pumping big bucks into these fork tongued gease balls. FYI, given the current trend which saw 18 boutique firms disappear last year, independent research may soon be a thing of the past. Seems like the only way many buyside firms will pay the independent research firms is for arranging visits by corporate execs into their offices, which turns these firms into nothing but a public relations outfit. In an interview, one well known sell side Analyst lamented his last three buys recommebndations, which resulted an average 15% one day gain on 4X normal volume, didn't see a single share cross his trading desk. Sad, so sad.
So the all knowing buyside can cry in their beer about the public pulling money out of their funds, but maybe they should look in the mirror to figure out who to blame?
PS-For those interested, here are the funds that have returned over 8.2% since the beginning of the year: CHTTX, FSCRX, FCPVX, HDPSX, HWSIX, LEXCX, NICSX, and POAGX. Small cap funds outperforming the Large cap & Tech funds
Vikes you are right, it doesn't matter whether it's from a major investment bank or a small shop, Analyst research is compromised by various agendas. You would probably be better off reading a fortune cookie.
Analysts are the political #$%$ of the financial community. They sell their opinion to the highest bidder. Hard to believe that they are given any credence at all these days.There are still a few good ones out there, though.
To make $ you have to do your own DD. (or go opposite of the majority of the analysts)