The Bonking Fund Manager

Hi Scott,

One of the funds I invest in is the Magellan Global Fund. I’ve since found out that the guy who was running it was bonking someone he shouldn’t have been and now the company has turned south. Do I hold tight or jump ship with everyone else?

Hayley

Hi Hayley,

That was actually another fund manager, not Magellan.

Though Magellan has had a couple of bust-ups: they lost their CEO, and then the founder (and star stockpicker) revealed he was getting a divorce, and then went on indefinite ‘Eat Pray Love’ leave.

Not surprisingly, Magellan Global’s performance is in the toilet.

So what should you do?

Well, to answer that let me tell you about a totally different fund that was coincidentally also called Magellan (well, Fidelity Magellan):

It was an investment legend – averaging a 29.2% annual return, the best 20-year history of any fund, ever.

That meant investors’ money was doubling every two-and-a-half years.

Yet get this: the average investor in the fund actually lost money.

How?

Instead of just leaving their money there … they traded in and out … just like you’re thinking of doing now.

Finally, let me tell you how I deal with this personally:

I invest with a robot.

It has no feelings. It doesn’t bonk anyone. It’ll never retire. It simply and automatically rebalances my portfolio each year (dud companies out, growing companies in). And it consistently achieves higher term returns than 80% of star stockpickers. Even better, this top-performing robot fund is dirt cheap.

It’s called an index fund.

Scott.