The Melbourne Cup

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Well it stopped the nation; and it also stopped the delivery of your Tuesday blog for 24 hours.

With around $100 million bet on the race, that means there were lots of people trying to pick the winner by doing ‘the form’.

But can we relate picking a winner at the horses to trying to pick who the best fund manager will be for the next 12 months?

  • The trainers would be the economists
  • The jockeys would be the fund managers
  • The horses would be ‘the market’
  • The tipping experts would be the researchers
  • And the form guide would be the historical returns

The horses with the best form are often the favourites.  The fund managers with the best historical returns are often the most popular and also gather the most inflows.

But as with Americain, the favourites don’t always win.

Portfolio Planners have reviewed the performance of some past fund manager ‘favourites’, and also found similar outcomes, eg.

  Top Performing Funds 1 Year Rank 1 Year Rank Following Year
1995 Colonial Managed Growth Fund 1 of 63 58 of 68
1996 Mullens – Investment Fund 1 of 68 79 of 81
1997 Tyndall – Equity Performance No. 3 1 of 81 57 of 85
1998 Challenger Aust Share Income 2 of 85 89 of 91


We could go on but hopefully you get the point.

Trying to pick the best fund manager based on past performance can be as difficult as trying to pick the horse with the best form as the winner of the Melbourne Cup.

Using an ‘enhanced asset class’ approach provides an excellent alternative.