Our Insights

About personal finance, investments and markets.
April 11, 2015

Ipanema Capital in the press

A few bits and pieces of press quoting us have made the rounds recently so I thought I would share. Maybe the key article for us has been a report by Citywire on the importance of fees as a selection criteria for investment funds. Citywire was kind enough to call us for some input – the article originally appeared in German and we have transcribed it in English below.

“The easiest way to maximize returns is to minimize costs. Investors and their wealth advisors should focus first on what they can control – and that is simply the cost side of the equation while short-term market returns are virtually impossible to predict. That might not sound exciting enough for some investors but cost advantages compound over time and make a meaningful difference long-term.

After we decide on the asset allocation and investment strategy with our clients, our #1 selection criteria for investment products is fees. We use both quantitative and qualitative hurdles. Quantitative means that we have fixed limits of annual fees that are acceptable to us and our clients. Qualitative means that we weed out certain fee structures such as performance fees that are in most cases far too expensive and intransparent.

Does that mean that we automatically favor index funds (ETF) over actively managed funds? Not necessarily. Some strategies are still only covered by actively managed funds. However, the key problem of most actively managed funds remains their high fee structure which is causing long-term underperformance relative to their benchmark. We advocate a core – satellite strategy, with ETF as core building blocks and actively managed funds only where there is no cheaper alternative.”

Many thanks to the journalists who were all a pleasure to work with.

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