Warning to choose investment funds carefully

17 February 2006
Top equity funds have made five times more income than the bottom ones over the last decade, according to new figures.

It is therefore important that investors choose their funds carefully, according to Fidelity International which warns that the difference between the top five and bottom five funds in the UK Equity Income sector has been 192 per cent.

During the last ten years, the average total return of the bottom five funds was just 63 per cent compared to the top five's 255 per cent.

On a shorter scale, the top five had a gain of 70 per cent over the last five years, while the bottom five on average lost 1.2 per cent.

Fidelity is therefore recommending using a multi-manager fund, which reduces the exposure to a single manager.

"With 80 funds in the sector to choose from and a variety of different investment styles, picking any one individual fund to invest in can be extremely difficult," said Chris Ralph, manager of Fidelity’s multi-manager equity income portfolio.

"In our new fund, we hope to address this issue, by blending a number of funds with complementary styles to achieve maximum returns with reduced volatility."

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