Investment Decisions - Tactical asset selection
This is the process of actually choosing and purchasing the investments. Issues considered here include:
- Direct versus managed investments
- Listed or unlisted securities
- Research ratings and historic performance relative to benchmark
- Fund Manager investment style and process
- Taxation and gearing levels
- Your required level of return
We believe active monitoring of asset selection is crucial to producing solid returns. As an extreme example of the impact investment selection can have on returns we compare 1 year returns of Small Cap Funds to 31 December 2002. ING Wholesale Emerging Companies Trust lost 23.2% while Perpetuals Wholesale Smaller Companies Fund returned a positive 12.8%. The difference is a staggering 36%.
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