Investing is difficult. I think the task of a UK fund manager being asked to put forward a diversified portfolio of 25-30 shares that can beat the market and importantly grow the buying power of its investors’ savings is extremely difficult.
In my view, the UK market faces a dearth of high quality businesses that have sustainable growth prospects. I have written before that the FTSE 100 offers a menu of shares that I’d rather pass on with very few exceptions.
To beat the market you have to have a portfolio that doesn’t look like it. This is where many professional fund managers go wrong. The thing is, it’s not their fault. They are told not to stray too far from the benchmark as if their judgement is wrong they will underperform the market and customers will withdraw their money and destroy the very profitable economics of fund management companies.