QUINN-life gets the thumbs-up from commentators for its low charges

Choosing an investment fund is like crossing a minefield. You want to come out the other end, mostly intact, and all the better if you find a gold nugget along the way

IS picking an investment fund just pot luck? Certainly, past performance is no indicator of how a fund will perform in the future.

A large amount of research in Britain and elsewhere has found that there is no definite and lasting connection between a fund's past performance and its likely long-term performance.

Not only that, managed funds generally under perform in their respective markets.

A 2002 British study found that over the past 20 years, 82pc of active funds failed to beat the benchmark FTSE All Share Index.

So what is an investor or someone who wants to invest in a pension to do?

One solution is to invest in an index tracker. This is a low-cost way to get exposure to equities, while at the same time avoiding exposure to the mistakes and whims of fund managers.

An index tracker is an investment where shares are bought with the aim of tracking or mirroring an index.

For example, an Irish equity fund would aim to mirror the movements of the ISEQ index (which is made up of the companies on the Irish Stock Market).

In other words, the fund manager simply holds shares in the companies that appear in the relevant index in the same proportions as they are represented in the index. This is known as passive management.

The costs are lower because index tracking requires no research team or 'big shot' fund manager who has to be rewarded with the price of a new Ferrari every year for his efforts.

The main advantages to passively managed funds, such as index trackers, are:

Consistent returns - returns over the longer term should closely reflect the performance of the index being tracked.
Peace of mind - since these funds have a specific mandate to follow, you are assured that all investment decisions are objective.
Access to information - as an investor you will be able to track the progress of your investment by following the stock market news.

On the downside, index trackers cannot match the performance of an index exactly because it costs money to buy and sell the shares to reflect their various weightings in the index.

Also, it is worth noting that gains are not locked in, so you can lose money.

(Note: index trackers are not to be confused with tracker bonds, which are higher cost, fixed-term investments generally over five or six years.)...

...QUINN-life Freeway Funds

QUINN-life gets the thumbs-up from commentators for its low charges.

There is an annual administration fee of between 1pc and 1.2pc (depending on the fund) and no entry fee, transaction charge, encashment penalties or bid-offer spreads.

The minimum you have to invest monthly is €51, and for a lump sum the minimum is €1,270.

The low charges have led to Celtic Freeway (which tracks the Irish Stock Market ISEQ index) delivering 72.17pc growth since its launch in January 2001. Over the last three years it has grown 82.21pc, over the last year 22.68pc, and over the last three months 10.91pc. Apart from Celtic Freeway, also on offer are Freeway funds that invest in European and US equities, and biotech and technology sectors. The US, technology and biotech funds have 1.2pc charges.

The company is soon to add a China/Japan index tracker, an Emerging Markets tracker and a Latin America index tracker.

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