Journalist Rodney Hobson has called for investors to ‘sack’ their fund manager and essentially make their own fund. Hobson argues that investors in funds do not receive dividends because the fees charged for investing in a fund virtually counteracts the dividend:
“It is not unusual for fees and costs to top 3pc of the value of the fund every year. Since UK shares yield on average 3.5pc a year – that is, you can expect to receive £3.50 in dividends for every £100 you invest in shares – it becomes clear that all the dividend income is being swallowed up by the fund.”
Hobson suggests that investors pick five or six shares, investing approximately £2,000 each within a Stocks and Shares ISA. He suggests that investors should pick shares of companies that they have heard of and that have rising profits and dividends.
News Source: Telegraph