Our content this month are as follows:-

• Client Survey - a Big Thank You
• Good News and Bad News
• Books we have read
• Quotes of the Month

In association with a London based consultancy we recently undertook a client survey. To those of you who replied our very grateful thanks; the response was well above the average.

We were very gratified to find that we had scored exceptionally highly in all areas and have identified certain parts of our service that could be improved. We will be undertaking a detailed analysis of the results with our consultants later in May and will publish the results as soon as we can after that.

Whilst this was a formal and scientifically designed survey, we are always interested in every form of feedback and take very seriously any suggestions made by clients; please keep your comments and suggestions coming to help us improve our service to you.

The business section of the New York Times recently carried an article about some research carried out by Professor Kenneth French of Dartmouth University (well known to us for his work on the three factor model) which has calculated the cost of active management to investors at $100 billion. And that is in the US alone! The main points in the article are as follows:-

• The figure has grown from $7 billion in 1980 to over $100 billion today
• This despite the fact that more money is invested in index funds now
• And the fact that costs have been driven down considerably

Included in the survey were institutional costs which are considerably lower than those to retail investors, meaning that the proportion of increased costs carried by the ordinary investor are considerably higher.

The good news is that you are not involved in paying these increased costs.

The bad news for other investors is that a recent report in the trade magazine "Professional Adviser" has pointed out that IFAs are increasingly turning to "alternative assets" in their desperate search for returns. We are also hearing anecdotal evidence that the private banks are pushing such alternatives as commodity funds, and cannot help thinking that because commodities are rising in price IFAs and private bankers may find it easier than normal to sell this type of fund to their clients. The major feature of alternative assets is that they have no investment mechanism and are usually based on speculation rather than investment. Commodity funds, hedge funds, structured products and the like will be heavily promoted at times like this and are to be avoided at all times.

This month we are recommending "Irrationality" by Stuart Sutherland, a very very interesting character who was a regular contributor to the Observer, the New York Times and the Daily Telegraph.

The book was first published in 1992 and was the forerunner to such classics as "the Tipping Point" and "Freakonomics", both enormous bestsellers. The book sets out to challenge our belief that reason is our guiding force in making decisions and with such provocative titles as "organisational folly", "false inferences" and "ignoring the evidence" is a challenging and fascinating read. You may change the way you make decisions after reading it, but somehow we doubt that will persist.

The book is available from shops and Amazon but if you have any difficulty finding it simply e-mail nikki@indexwm.co.uk and we will be happy to help.

“One man has enthusiasm for 30 minutes, another for 30 days, but it is the man who has it for 30 years who makes a success of his life.”
Edward B. Butler, American Scientist

“It is what you learn after you know it all that counts."
John Wooden