So let me continue by saying that it was great to meet a fair number of you at our packed growth seminar last week and at the busy London Investor Show, at which I was presenting (albeit a rather gloomy talk on how to avoid investing in trouble stocks). Thank you for your positive comments and excellent suggestions as to how we can continue to make the publication even more useful to you.
I was also very encouraged by the discussion on how retail investors might use exchange traded funds (ETFs) in their portfolios that I chaired at the London Investor Show. I was impressed with the audience's excellent questions and for sticking with us for an hour of what at times became quite technical discussion. It suggests to me that ETFs are starting to get the attention they deserve because, while their construction can indeed be complicated - and it's good to understand how they work - they are in fact an easy and cheap way to build professional quality portfolios.
As it happens, this was a point that was also made at our growth seminar by Christopher Aldous of Charles Stanley Pan Asset. He and his team run portfolios constructed using ETFs, built on the principles of asset allocation that have been proven to account for the bulk of long-term returns, and which have long been employed by those running pension funds. It was not until ETFs arrived with their ultra low total expense ratios a decade ago that it was possible for private investors to run their money in the same way, and certainly not economical - now you can gain exposure to all manner of assets and indices for charges of just a few basis points.
The IC will, of course, never abandon stockpicking - it's fun after all, and can be very rewarding if you get it right. But growing your wealth and chasing growth stocks are two very different things; the latter often involves taking unnecessary risks, especially if you are trying to grow your wealth unrealistically quickly. I believe growth comes with patience, common sense and dividend reinvestment - and that the world as a whole still has much growing to do, even if the immediate outlook in some parts looks a little shaky. ETFs offer easy exposure to this secular trend.
And if building sensibly allocated portfolios of ETFs still isn't exciting enough for you, take a look at some of the so-called smart beta ETFs that can deliver more than simple index returns. It's another game changing development that could be instrumental in restoring the balance of power towards private investors. And that puts a smile on my face.
