• Fundology

• The Secrets of Successful Fund Investing

• by John Chatfeild-Roberts

Reviews

• A top-flight financier with an impeccable performance record should know his onions when it comes to investment advice. And he does. The trouble is, this book reads like a self-promotion. There are more than 2,000 unit trusts and Oeics available to choose from in Britain, according to the Investment Management Association. For the average private investor this is a daunting amount if they decide they do not want the advice of an intermediary. John Chatfeild-Roberts, Jupiter's head of fund of funds, has penned a guide to investing in the fund industry to help such investors. Fundology, written in plain English, purports to reveal the secrets of successfully picking the best funds. It is an attempt to explain exactly how funds work, how to pick the best managers and the investment mistakes to avoid. The book starts from the premise that there are many works on successful stockpicking but relatively few on fund investment. In some ways Fundology reads like the first Financial Planning Certificate guidebook advisers would read before sitting an exam - except that Fundology concentrates purely on funds. Each chapter looks at a different facet of funds, for example, the funds concept, how funds work, growth or income, with each chapter ending with points for the reader to remember. For those who do not know much about funds, the book has its merits. Chatfeild-Roberts' writing style is clear. It generally avoids industry jargon and he uses many practical examples of real events to support his arguments. Invesco Perpetual's European Growth fund does not come out of the book well, as it is often used an example of how things can go wrong. Chatfeild-Roberts also often provides readers with several websites where they can research funds on their own. The glossary at the end is also a useful tool. The big problem with Fundology is that at times you are left wondering what the point of the book is. If investors want advice on funds the first person they should be consulting is their financial adviser rather than a text. Chatfeild-Roberts concludes it is people who make the difference in fund management and the best way of getting to know them is meeting face-to-face. However, he then writes: "That will not be a practical option for most private investors. The best fund managers do not, unfortunately, have the time to see private investors individually, though teams such as ours with large funds insist on meeting them on a regular basis." It is these constant references to the funds of funds that Jupiter manages that let the book down most. Chatfeild-Roberts has been professionally investing in funds for 14 years and so knows what he is talking about, but despite the knowledge he imparts to the readers, he makes it clear it is not an easy art: "Having started the chapter [How to pick the best fund managers] saying that it is hard to pin down what makes a good fund manager, you can see in truth it is very hard indeed." As a result readers are left wondering at the end whether investing in a fund that invests in other funds, which Chatfeild-Roberts mentions as being available, would be the best route to go for. However, in a fund of funds industry topping £23.4bn (both fettered and unfettered) in assets under management, it is strange that the only funds of funds Chatfeild-Roberts mentions are his own. He writes: "If you are happy with it as a concept [fund of funds] and us as investors, there is no need to look further." Indeed, the author dedicates the penultimate chapter to the merits of the Jupiter Merlin Growth fund he runs, which calls the real aim of the book into question. A more balanced work would assess the qualities of all the fund of funds managers. Unfortunately, Fundology is littered with references to the portfolios Chatfeild-Roberts manages, which could be seen as a form of advertising. "If you cannot find the best fund managers yourself [which is what the book is meant to teach], why not hire a professional to do the job for you? That is what I and my colleagues in Jupi-ter's fund of funds team spend our time doing." Rather than then mentioning other groups that do the same, Chatfeild-Roberts launches an attack on other multi-managers: "The vast majority of multi-managers, in my view, pay too much attention to the issue of price and too little to the issue of quality. "While they say their aim is to invest with the best, they too often fail to practise what they preach. As a result, in many fund of fund operations, the investor ends up with a shapeless fund that is far too large." As a journalist I have always been taught to give a story from both sides. Unfortunately the lack of a right of reply for the likes of fund of funds managers such as Credit Suisse, Gartmore and New Star - all of which would argue against the criticisms made by Chatfeild-Roberts - makes Fundology a biased guide to fund investment. No one can doubt Chatfeild-Roberts' experience and skill in selecting funds. The performance of the Jupiter funds of funds is generally strong. In addition, the last chapter of the book provides examples of stocks he got wrong and discusses the importance of considering the valuation of shares. The problem is that by the time he has done this, the cheese has already been set in the mousetrap. The readers have Jupiter funds of funds firmly established in their brain.
  Mark Pickering