If glitz and glamour are to be found when investing, they’re usually found in blue chip companies.
Blue chips attract all our attention, their daily fluctuations play out on the news, with many having name recognition through our interaction with these companies on a daily basis.
However, despite media finance gurus regularly proclaiming blue chips as the place to be at the beginning of each year, some blue chip returns are as glamorous as MC Hammer and Vanilla Ice.
Names like Telstra, News Corp, AMP, Lend Lease, Tabcorp, Elders and Centro have sunk over the past decade in terms of their price-only returns.
And at the start of last decade, some experts were suggesting investors stuff their pockets with these companies.
If it’s not obvious, blue chip companies don’t automatically translate into blue chip investments.
Conversely, hands up anyone who has heard of Aurora Oil & Gas?
The oil and gas company rocketed into the ASX 200 last year and produced the best returns of any stock in that index, up a mind blowing 729%.
The best growth over the past decade has come from companies outside the ASX 300, but generally you don’t hear about these companies until they become big.
If you knew about Aurora, congratulations, but most people didn’t and hunting for the next Aurora, like avoiding the next AMP (down 67.75% last decade), is often a fool’s errand.
Targeting the returns of a particular part of the market, through a diversified value or small cap fund, is the best way to capture the growth of the next big thing, while minimizing the impact of perennial underperformers.
There’s no glitz, there’s no glamour and at your next BBQ someone else will hold court with all the share tips.
Yet while you’re on track to capture new growth, everyone else can second guess their tips and hope they guessed right.
Peter Mancell is a director of Mancell Financial Group and FYG Planners AFSL 224543. This information is general in nature and readers should seek professional advice specific to their circumstances. If you’d like help with your financial future, we might be Australia’s best financial planner. We think we’re Tasmania’s best financial adviser and
