An investment manager once tried to convince me that a fund of funds, made up of a portfolio of other funds, was likely to perform better than a fund that invests directly in securities such as shares and bonds. It was my first year of reporting for Investors’ Chronicle in 2008 and he was responding to an opinion piece I’d written criticising the expensive layering of charges in these funds of funds, for often mediocre performance.
He showed me a graph of outperformance of funds of funds vs “ordinary” funds. I pointed out that while one period on the graph showed outperformance, the other did not.
However, the chap got so angry about my stubbornness to accept his argument and the “proof” of the graph that I felt obliged to leave — without finishing my hot chocolate. It was a very good hot chocolate, as I remember, but some of his spittle had landed in it.