John Chatfeild-Roberts - Fundology: The Secrets of Successful Fund Investing

In 25 years of observing and writing about the UK financial markets, I have often been struck by the almost total absence of good books about the art of investing in funds. There are some consumer guides of variable quality, and a good number of overly simplistic online guides but until now, nothing of any substance written by a professional fund investor. The contrast with the number of books about stockpicking and trading, of which there are thousands, could not be more marked.

This contrast in treatment is odd. All the evidence I have seen demonstrates that the great majority of those who try their hand at trading and picking their own stocks fail to do as well as they could by investing in a well-picked portfolio of funds. Owning funds is a much safer and more convenient way of investing your money than investing directly in stocks and shares (let alone trading with geared instruments such as spread betting and contracts for difference). Most professional investors use funds to manage their own money.

So it seems strange there is not more help available for those who want to understand how to pick funds well. There is certainly no lack of demand for the end product. With over 300bn invested in the UK funds industry, many investors do understand that funds are indeed a sensible choice. However, the general tone of much comment is negative; the coverage of some aspects of the funds business in the media is adverse, the academic evidence about the performance of the average fund (not that good) is similarly downbeat, and some investors lack trust in the quality of the service they think they might receive from the industry.

It would be unwise to underestimate the scale of this problem. Many of the funds you can buy in the UK are too expensive for the performance that they actually deliver. As the regulators are right to point out, too many funds also are sold on the wrong basis; usually past performance that subsequently fails to repeat. All this helps to explain why investors may be justified in feeling cautious.

But to my mind, it also reinforces the case for investors finding out how to distinguish the good, the bad and the ugly in the funds business. There are some dodgy estate agents and car dealers in the UK, but that does not mean you cannot buy a good house or a good car, if you know how to go about it. So it is with funds. What we all need is a trustworthy, professional guide to help us find the cream of the crop, because the best funds are well worth having.

In the UK, few professionals are better qualified to provide sensible guidance on this matter than John Chatfeild-Roberts, who runs the fund of funds team at Jupiter Asset Management, having previously carried out a similar function at Lazard Asset Management and Henderson Administration. When he agreed to write this book about what he has learnt as a fund investor, I was delighted. Anybody who knows John knows that he is a man of the highest personal and professional integrity always the first and most important criterion when dealing with a professional of any kind.

After fourteen years running funds of funds, he also knows the unit trust and OEIC business in this country inside out. In this book John describes his thinking and the way that he and his team (Peter Lawery and Algy Smith-Maxwell) go about choosing funds for their six portfolios. You will, I hope, quickly see for yourself the exceptional qualities that have earned him and his team a string of industry awards in recent years. John's success is fundamentally rooted in the timeless qualities of experience, judgement and common sense the essential ingredients of any successful investment strategy.

Jonathan Davis

Investment columnist, The Independent

Founder and editor, Independent Investor

Chairman, Half Moon Publishing Ltd

www.independent-investor.com

Oxford, December 2005