Deep Dive – June 2024

KISS – Keep It Simple, Stupid!

The heading is a reference to the mnemonic widely used in training courses, mainly sales and marketing variants, in the latter part of the last century.  Many readers will know it, I am sure, but for those who don’t, the idea is that only simple concepts are readily understood by prospective customers and so if you want them to be attracted to what you have on offer, you need to have a marketing message that conveys simple benefits, like “Persil washes whiter” or “Every little helps”.

It is true that some consumers, like myself, actually enjoy looking into detail and researching products, but I would happily admit that I am attracted to simple solutions in the investment world, knowing that complexity often allows product manufacturers to rip off consumers or permits the disguised conduct of fraudulent, or at least negligent fund management activities that go undetected, as for example happened with split capital investment trusts.

For Portfolios

Last month’s Deep Dive article listed some options for those who might want to simplify their investment affairs as advancing years make things more difficult.  Here were two of the options:

• Move to multi-asset funds, either those built with passive index-tracker components, or managed variants.
• Continue to retain a portfolio of funds, but much simplified, using 6 -10 funds which cover all the main global markets

This month I want to share with you some data that I researched after thinking more about how investors with slightly differing characteristics and objectives might actually go about the process.

I also wanted to do some more validation on my recent affirmation that investing in a way that meets a desire to support sustainable or general ESG objectives would not result in weaker returns and in fact might deliver better results. 

I was especially motivated to do this after reading a trade press report of an IFA who claimed that ESG investing was pointless and a scam.  When opinions about investments are polarized, one can as rule assume that the quiet but active majority (being motivated as a whole by the prime objective of making money) will come out on the winning side – that is in fact the essence of the momentum factor as a driver of investment valuations.  It seems that in Europe at least the majority prefers sustainable capitalism.

In the spirit of the heading, this article is in itself a little shorter than recent monthly missives.  Feedback on your preference for levels of detail is always welcome.