Turning investors away from inappropriate investment behaviour will generate “the single greatest increase in their lifetime investment returns”, according to US author and investor behavioural expert Nick Murray.
Murray said the “average US mutual fund investor consistently finds a way to blow somewhere between two-thirds and 40 per cent of the average return available to him had he simply bought the most mundane mutual fund”.
Speaking at an MLC Investment Forum in Sydney today, he said “average annual compound 20 year returns achieved by the average mutual fund in the US to 2006 was 11.3 per cent, while the (comparable) average investor return was 3.9 per cent”.
He called on Australian advisers to “change the fundamental nature of what they offer to investors as a value proposition”.
“I ask you to consider adopting the 21st century value proposition, which is ‘behaviour management’, and leaving behind the 20th century value proposition, which was ‘selection and timing’.”
This involves leaving behind the “prediction and attempted control of what investments are doing and, instead, attempting to predict and control what investors are going to do”, he said.
