What's the real score
The power of perception.
I’ve studied statistics for my years, and once so young I believed what was presented, was true.The power of statistics is both an influential tool and a reality check. So what makes the difference?
Is the glass half empty or half full? Behind the numbers the persuasive genius is at work.
Investment markets are full of numbers, so many in fact that even the most studious investor may struggle to differentiate results from the end figures.
I spoke to a client today who mentioned the top super performing fund over 10 years.
To this I ask you:
- Against who?
- Against 1 year?
- Against 5 years?
- Against 15 years?
- Is it net of fees?
- Are there performance fees?
- What were the tax implications within the fund?
- What was the accumulative return over the period – After all fees are taken out?
- If I invested $10,000 5 years ago, what would it be now?
- 10. Would that $10,000 be more or less against its competitors?
- 11. If you had strategies that saved you tax, interest, or gave you other benefits would that result be the same?
- 12. There are a million more questions to ask and compare
Is the top ten really the top then? Or is it really just the best statistical results given the best period of data for a certain time, that means nothing to the individual or sometime the investment.
I ask you the question?????
Are the following results consistent with your experience? And if not ask yourself why and try to discover the reasons….
Top 10 balanced options over 5-year period to 30 June 2012
According to SuperRatings, the top 10 super funds based on the ‘balanced’ option (investment options with between 60% and 76% in growth-style assets) over the 5-year period ending 30 June 2012 are:
| Top 10 Balanced (60-76) – annual returns for 5 years as at 30 June 2012 | ||||
| Fund Investment Option | Option Type | Return Period | Return (% p.a) | Rank |
| ESSSuper Accum – Balanced | Balanced (60-76) | 5 year | 2.71% | 1 |
| LGsuper Accum – Conservative Balanced | Balanced (60-76) | 5 year | 2.59% | 2 |
| CommonwealthBank Group Superannuation Plus – Mix 70 | Balanced (60-76) | 5 year | 2.45% | 3 |
| FSS – HealthSuper Division – Medium-Term Growth | Balanced (60-76) | 5 year | 1.99% | 4 |
| QSuper | Balanced (60-76) | 5 year | 1.8% | 5 |
| REST – Core Strategy | Balanced (60-76) | 5 year | 1.74% | 6 |
| Acumen – Core Strategy | Balanced (60-76) | 5 year | 1.74% | 7 |
| GESB Super –Balanced Conservative Plan | Balanced (60-76) | 5 year | 1.55% | 8 |
| CareSuper –Balanced | Balanced (60-76) | 5 year | 1.15% | 9 |
| AMG Universal Emp – Balanced | Balanced (60-76) | 5 year | 1.14% | 10 |
Table note: All results are net of fees and tax and are for the 5 years ended 30 June 2012. Past performance is not a reliable indicator of future performance.
Source: SuperRatings
I ask you are these the best performing Balanced funds available in superannuation, or just the best performing balanced superannuation funds?
Do you know what the difference is? Are you meant to know what the difference is?
What is the universe of funds they are selecting from?
One thing I can most defiantly tell you is, there are balanced funds that you can invest in super that have performed much better over this period.
So what are we really looking at when we read headlines best and worst funds???
Lets explore some other examples of this using statistics and how the can represent or misrepresent.
Here we explore the notion of time series using golf, think of each hole as a year in time and the score a return.
I take it from today, another humbling day in what proved to be a very humbling existence on the course.
I played golf.
Sporting a brand new swing only 500 practice balls old. And grand company of low handy caps.
Don’t stuff it Andy Fenton— line up the club, widen the stance, shoulders back, head in line with the spine, now relax the grip…… wrist strong but relaxed, bring club back on that invisible line — feel the chin on the shoulder and cock the wrists….. Be relaxed and let the hips guide the motion the eyes firmly on the ball but not for long, Sweep the club along the invisible line watching the ball then——————————————————————————————————————————————Boom the impact! Follow the ball with your eyes follow through straight but not too straight don’t cock to early or too late, follow the ball don’t look where it was but rather is now —- one, two,,,,,, three hundred meters down the middle. I could hear Richie Benaud, What a shot, What a shot!
Stroke two with the wedge to the green, a long putt wooooooooooooooooooooooooo nnooooooooo just missed, then just a tap into the hole.
Par
Stick with me what a way to start the day.
Over that hole I was the best, there was no better. Invest in me cos I am the par king of the 1st hole and it should have been a birdie.
There where 18 holes today and if you judged me by the 1st hole then I would have been a clear winner but I came in with a 107.
Yep I stuffed it!!!
Judge me by the 1st hole I was a champion. By the game I was a hack.
What do you want out of a golfer or rather your investments?
I was the number one of the 1st today at green acres
But I was one of the worst for the day.
I was the best for the hole but was I best to bet on, surely not the best investment.
My question to you is, do you get blinded by what you see once? Take another look. Things are not always as they seem.
Who would you prefer to play with?
All the best,
Andy Fenton
http://www.andyfenton.com.au
Play straight, sweeps stakes and have a happy and safe cup weekend.
Protect your superannuation… Mornington Financial Services……………
