The First Fundamental Tracker Fund Manager in the UK
Over the last thirty years there has been a gradual acceptance that passive
investing is a lower cost and lower risk method than active stock picking.
We endorse that approach but take it further by using a fundamental measure
of company rather than just its share price as conventional passive trackers
do. To see why look at the bar chart below.
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Contrary to popular opinion success from investing in the stock market does not come from picking the next big thing or finding stocks that have been overlooked by everybody else. There are too many investors and too much data to let one person beat the market on a consistent basis.
Instead, success comes from the mundane, but reliable, process of constructing a portfolio that uses reinvested dividends to grow the assets via compound interest. The bar chart above shows that over five years 80% of the return comes from dividends and growth in dividends and only 20% comes from capital appreciation.
Rob Davies of Fundamental Tracker Investment Management Ltd explains the concept in his Motley Fool Podcast
Fundamental Tracker Investment Management Ltd uses evidence such as this to design its investment process. Its uses this and other such hard data to run its first fund, The Munro Fund, which is designed to give the asset class returns of the FTSE 350 at low cost and low risk. This link will take you to the fund website and this link will show how well it has achieved its aim.