Active Funds worth the cost (TER) of over 1% – Example Classic Fund

The Classic Fund run by Thomas Braun and Georg von Wyss is an interesting example of an active fund that has beaten its benchmark over the last 10-15 years returning an annulised 10.5%. Although it got clobbered in 2007 and 2008, even vs the benchmark. It has underperformed in 3 of the 7 past years. The fund managers approach worked best in 2000 and 2001, which is probably one of the reasons for the media attention the fund and portfolio managers regularly get, aswell as the very noteworthy performance in 2012 and 2013.

This is a very active fund as can be seen by their portfolio turnover rate of over 130%. With CHF 850m in this particular fund, that turns out to mean their brokers get orders for around CHF 3m every calendar day (so more like CHF 4.4.5m every trading day). This of course makes them a first call for sales and trading departments who in turn feed them what they think or know is the most valuable information.

On a sidenote this fund is also an example of what kind of regulation a fund occurs: They have 2 portfolio managers, 3 analysts, 1 compliance officer, 1 manager, 1 sales/analyst. Thanks to the large size of the fund, all those mouths can be fed without incurring to high of a TER. It is 1.3%. An ETF these days sets you back 0.3% on average I believe.

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