Hewison fires shot at managed funds

Melbourne-based financial planner and pastFinancial Planning Association(FPA) chair, John Hewison, launched an attack on managed funds at the Certified Financial Planners (CFP) conference in Sydney recently, labelling them flawed, expensive, not client focused and not true-to-label.

“We have learnt, over time, that managed funds are not usually client-focused,” he said. “We saw that a lot of managed funds didn’t deliver what they were supposed to deliver. They are not true-to-label in a lot of cases — for example, imputation funds are often trading funds.”

Hewison said that pooled funds are compromised and many have flawed product design.

“Your client might take an intelligent, long-term focus, while many others are panicking and pulling their funds out. So the pool concept becomes compromised.”

Hewison also said the unitised process is used to develop products which it doesn’t suit — for example, allocated pension funds.

The investment selection process preferred by Hewison’s practice, Hewison & Associates, is direct investment into Australian equities.

However, Hewison said the group is not a fund manager and does not pretend to be.

“We are very conservative, so we use listed investment companies, banks and a small number of selected blue chips.”

Hewison said listed investment companies had performed exceptionally well over the past few decades and were continuing to do well even in a down market.