An Active Tracker Fund

There is a strong body of evidence that picking stocks to create a portfolio that will beat a market index is a loser's game. If that is the case then it follows that trying to choose an actively managed fund is equally difficult.

To resolve that problem tracker funds have become more popular in recent years. However, because passive tracker funds use share prices to determine how large each holding of a stock is they are vulnerable to a feedback effect. In other words if a share price goes up new money will have to be allocated to it at the expense of shares that have fallen. If the share price move is based on sentiment rather than rising profits the fund will suffer when the inevitable correction happens. That was clearly demonstrated in the dot com bubble. 

Until now all trackers have suffered from this problem because they all used price to determine the size of each position.

The Munro Fund is different.

The Munro Fund uses the fundamental data of forecast gross cash dividends, adjusted for share buy-backs and currencies, to create the portfolio. When fully invested it will invest in all companies in the FTSE 350 that are forecast to pay a divided but excluding investment trusts.  We believe that using fundamentals to weight the portfolio rather than price will give better returns over the long term than a passive tracker - and there is evidence from the US that it does work.

 

To read more about this company and who we are, please explore this website.  If you want to return to this home page at any point simply click on the picture at the top of the screen.

You may also wish to listen to the podcast on the Motley Fool website that explains the process in more detail- just click the icon below

 Enter the Site