The Best Investor

Funds under management (FUM) is basically the total value of assets that an investment firm or fund manager controls on behalf of its clients. Think of it as the money that’s entrusted to them to invest and manage.

Funds under administration (FUA) is similar to FUM, but it refers to the total value of assets that a company is responsible for administering, regardless of whether it’s making investment decisions.

Key difference: While FUM implies active investment management, FUA simply means the company is overseeing and managing the assets.

In 2024 Fidelity carried out a study of their clients to find which group of account holders had the best-performing portfolios.  Over a 10-year period they discovered that the highest returns came from accounts where the account holder was dead.  YES DEAD.  The second-best performing group of accounts were owned by account holders who had forgotten that they had the investment.  YES FORGOTTEN.

Does this mean that the smartest investors are either dead or suffering from memory loss? 

What we can learn from this is that successful investing is boring.  A set-and-forget investment strategy rewards patience while those who make short-term decisions, particularly emotional knee jerk responses to market booms and busts, will be punished.

Studies of long-term investment performance of investment managers demonstrated that over a 20 year period, 93% of the managers underperformed the market index.  Similarly, over a 10 year period, 90% underperformed the market index.  Therefore, unless you choose an active manager in the top 7% – 10% you will be better off with a passive investment strategy.

So the message from Fidelity is loud and clear!

Buy a diversified investment portfolio and leave it alone!  Once you have made your investment decision spend your time enjoying life with your loved ones rather than fiddling with your investments.

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