BOOK REVIEW: Effective Investing
Mark Dampier leads the funds research team at Hargreaves Lansdown, which has grown over the past thirty years to become the UK?s leading investment supermarket for private investors, entrusted with over £55 billion by over 700,000 clients and becoming a FTSE 100 company in the process. The book is a worthwhile read with a nice conversational style.
His theme is that investment platforms such as Hargreaves Lansdown?s make it easier for the private investor to manage his or her money, that funds are the way to invest, and that the vast number of funds, many poorly performing (?90 per cent of funds are probably not worth the money?), requires independent research to pick the best. He tackles whether he is just ?talking his book? with convincing reasons for using both platforms and funds rather than direct investment, and has useful pointers on how the private investor can research and pick funds themselves rather than relying only on those platforms or advisers. He also covers building and managing a portfolio, and has interesting chapters on how he invests his own money and wide-ranging reflections on what he has learned over his career (?it?s never as bad as you think, and it?s never as good as you think either?). The success of Hargreaves Lansdown and the excellence of its platform supports the points he makes.
Any reservations? He?s a bit dismissive of investment trusts, which are normally lower cost and better performing than their equivalent funds, and he?s also coy on the costs of platforms. As a comment on the industry rather than this fine book, I remain horrified by the cost of investment management and of investment platforms ? Hargreaves Lansdown?s pre-tax profits of £199 million in 2014/5 were an astonishing 67 per cent of its revenues ? and there?s a huge opportunity and need to reduce the cost of investing as we are all forced to greater reliance on ourselves rather than the Government for pensions etc. The Financial Conduct Authority may just be getting on the case here – and there?s a lot to go for.
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