Fisher Investment is an independent money management firm based in the US. Founded in 1979, it provides portfolio management and strategic wealth advisory services for affluent individuals and institutions. Fisher Investment’s investment strategy focuses on global diversification across major asset classes. However, there has been much debate around Fisher Investment’s returns and performance track record over the years. In this article, we will analyze Fisher Investment’s historical returns, examine the criticisms, and uncover the key factors impacting its performance.
Fisher Investment’s Long-Term Returns
According to Fisher Investment’s own reports, its Private Client Group strategy delivered a net annualized return of 14.1% from 1994 to 2018, compared to 9.1% for the S&P 500 Total Return Index. However, critics have argued that Fisher Investment cherry-picks the time period that shows its performance in the most favorable light. Independent third-party analysis by CXO Advisory Group examined Fisher Investment’s performance from 1999 to 2012 and found an average annual return of 6.9% vs 7.8% for the S&P 500. The analysis indicates Fisher Investment underperformed the index, especially during bear markets in the 2000s.
Impact of Market Timing and Risk Management
Fisher Investment’s investment process relies heavily on market timing and tactical asset allocation. During bull markets, Fisher tends to have high equity exposure, while increasing fixed income and cash holdings in bearish conditions. This dynamic approach can boost returns when timed properly, but also poses risks of mistiming the markets. Furthermore, Fisher Investment aims to protect capital from large drawdowns through risk management. While this helped preserve wealth in down markets, it also reduced participation in the upside.
Criticisms of Performance Claims and Fees
The biggest criticism of Fisher Investment’s track record comes from the discrepancy between its reported returns and third-party analysis. The long-term 14% return figure has been questioned for not matching broader market performance. Critics also argue that Fisher Investment’s high management fees – typically 1% to 1.5% annually – significantly eat into net returns. However, Fisher Investment maintains full fee transparency and asserts that its strategic advice provides value beyond portfolio returns alone.
Impact of Equity Sector Concentrations
Fisher Investment’s sector-specific stock selection has also impacted its historical performance. Analysis shows that Fisher tends to have large overweights in consumer discretionary and technology stocks. This boosted returns tremendously during growth-led bull markets. However, the same concentrations led to underperformance when these sectors fell out of favor. Maintaining a balanced sector allocation is crucial for risk management and smooth returns.
In summary, Fisher Investment’s long-term returns appear broadly in-line with market benchmarks, but with higher volatility stemming from tactical allocation decisions. Its returns are impacted by both sector concentrations and market timing calls. While Fisher Investment boasts beating the market substantially, independent analysis of its track record shows more nuanced performance results.