If you know anything about investing, you’ll know it’s important to diversify your interests – right?
Well, a new study from University of Technology Sydney and Macquarie University has turned conventional wisdom about investing on its head. At least when it comes to the investment companies themselves.
In a world-first study into specialist active management firms, the UTS team found they actually outperform generalist fund families with a more diverse offering.
On average, specialised firms deliver 70 basis points a year (or 0.7%) more for their investors before fees.
Lead researcher Dr Lorenzo Casavecchia says the reason specialised funds do better probably comes down to better management, greater expertise and private information sources.
But while specialisation can lead to greater risk, investors can get the best of both worlds by spreading their capital across a range of specialist active funds.
(The information in this article should not be considered financial advice.)
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