How private investors can beat the pros – The Property Chronicle
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How private investors can beat the pros

The Fund Manager

Investing is one of those rare pursuits where amateurs can have an advantage over the professionals.

It happens in almost no other field. If I competed against any professional sports person, I’d lose every time. If I was asked to perform dentistry or heart surgery, I wouldn’t know where to start. I don’t have the years of training needed to perform these highly specialised tasks.

However, good private investors, who know what they’re doing, outperform the pros on a regular basis.

I have personal experience of this – the amateur version of myself is outperforming the professional version! The share selections for my personal portfolio, on average, are outperforming the fund I run, despite my personal portfolio receiving far less attention (for the avoidance of doubt, my fund has also significantly outperformed its benchmark and peers).

As a fund manager I have good access to company management teams, third-party research, professional subscriptions and a network of contacts. I attend conferences (virtually nowadays), capital markets events etc. I have Bloomberg data on tap and qualifications coming out of my ears. And yet a significant number of private investors will have performed much better than me.

Despite the pros having access to more resources, I’d argue they’re at a disadvantage to private investors in other ways. This is why so many active fund managers fail to outperform their benchmarks, and why private investors often fare better.

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