Source: Netwealth, Assumes an annual gross return of 5%. The traditional wealth manager fee of 1.86% is calculated as the average total expense ratio (TER) of the wealth managers listed in research by Numis and Citywire published by Citywire Wealth Manager in February 2015. The TER for Netwealth is calculated as 0.85% based on the 0.50% all-in fee, 0.30% estimated all-in underlying fund costs and 0.05% estimated annual costs of trading.
An actively passive approach
We actively manage low cost passive investments – mainly through passive funds and ETFs – which has led to all our portfolios outperforming our peer groups since our launch three years ago.
In contrast, in each of the major equity regions, the average active manager has underperformed the passive option over the last three years – with the popular “Equity Income” style of management, embraced by star managers like Woodford, faring even worse.
Source: Morningstar, Bloomberg, Netwealth calculations. All annualised returns shown net of fees in GBP terms, as of 31st May 2019.
This demonstrates the risk of ‘crowding’ into popular themes in markets – relentless marketing meant that the weight of money searching for income strategies doomed investors to mediocre future returns. This is why we focus on broad market exposure rather than a thematic approach. We also target total returns rather than income only.
The Netwealth difference
The above factors speak to our investment approach and how it challenges many of the traditional (and riskier) approaches in our industry. However, we also offer investors more in other ways – as this article shows – such as more control and better transparency.
We explain why our personal experiences and needs led us to set up Netwealth: to revitalise the outdated wealth management sector and to make the investment journey a lot smoother and more enjoyable.
Please remember that when investing your capital is at risk.