Here is an extract from the report on the failure of the funds management industry
It is a story the funds management industry does not want told: the difficulty most fund managers have in beating the market in which they invest once the fees are deducted from the returns. ''Active'' managers justify their fees by promising to select the right shares and beating or outperforming the market in which they invest. However, for most managers, the promise is a hollow one.
The latest confirmation of just how hard it is for funds to earn their fees comes from research house Mercer. In its latest fund performance survey, the median-performing manager in Australian shares produced a return for the year to July 31 of 3.1 per cent, or just 0.1 of a percentage point better than the S&P/ASX 300 index's return of 3 per cent. And that's before fees. Once fees are removed, the median-performing manager underperformed the index. Exactly by how much will depend on the level of the fees.
