The value of the past
The world is full of stock market rules for success and investment mantras. “Ten things to consider before you make investment decisions” or “The five worst investment mistakes”: those are some of the lists that offer newcomers orientation in the investment jungle. While it is true that investment rules are incorporated experience, they are, however, unable to replace it. Only those who have been in the market for a long time are in a position to assess current trends and to separate the tried and tested from the unsuccessful. “We have been offering our portfolios for 20 years now and our funds of funds for 15 years – and continually with the same concept”, says Carsten Gerlinger, Managing Director and Head of Asset Management at Moventum AM. “We are aware of the value of continuity – and the same goes for our clients.”
Retailers and established product brand manufacturers like to advertise their long-standing history, because reference to tradition tends to inspire confidence. Those who have been in the market for a long time are able to prove their quality and can draw on a wealth of experience. Financial markets, on the other hand, are frequently characterised by short-term thinking. There is a reason why legal footnotes are always pointing out the following: Past performance does not guarantee future results. What counts is speed, flexibility and the future. “Experience is the prerequisite for correctly assessing what is given and what is to come”, says Gerlinger.
Dealing with an oversupply of information and a wealth of financial products is the central challenge in investing. This is where experience serves as a filter: what is important and what is not important, what is promising and what is entirely new? A great deal of experience is required for learning processes: As developments on the capital markets are often characterised by recurring patterns, it is of great value to recognise those patterns.
A Chinese proverb says, “He who sees from afar sees clearly” – it is experience that provides the necessary distance from events. It saves investors from making hectic and expensive changes to their strategies. “Experience is all the more important because higher returns on the financial markets are usually accompanied by greater risks”, Gerlinger points out. Of course, this does not mean you simply need to look to the past. “You have to remain open to change. After all, the future is not revealed by looking back.” Experience helps above all to avoid making mistakes.
With its decades of experience, Moventum is a relatively rare species in the fund industry. Its portfolios and funds of funds are set up according to a proven and stable concept, with a largely identical team, the same fund selector and positive long-term performance. “This proves the quality of our offering and reinforces the trust of our clients, who are frequently looking for long track records”, says Gerlinger. “Clients’ need for continuity is of particular importance for advisors.”
Continuity does not only mean passing a test. It also ensures comparability over time. This can turn out to be a problem when performance data of funds or indices are reviewed, because the indices no longer include those funds or companies that have disappeared from the market because they were unsuccessful. Thus, only the “winners” are remaining. This problem is also known as “survivorship bias”, which systematically presents average performance too positively. “Oftentimes, performance data therefore only pretend to show continuity”, says Gerlinger. “At Moventum, on the other hand, continuity is actually given.“
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