Technical terms such as portfolio diversification stop-loss policies and momentum investing may not ring a bell but they rigorously employed them in their

Technical terms such as portfolio diversification, stop-loss policies and momentum investing may not ring a bell, but they rigorously employed them in their strategy.”The girls really got their teeth into the competition,” says Tara Golshan, Proshare’s head of education and a member of the judging panel. “We didn’t want to put all our eggs in one basket.”It’s always fun to hear tales of young tyros trouncing the professionals, but the St George’s investment club is more than a one-off. They lack the econo-speak and technical language of the experts, but they show that even the most financially na? can develop solid investing skills with a little effort.As they shyly disclose their favourite stock-picking practices, the teens do not fully appreciate their sophistication. When a share started to taper off the club sold, as with P&O Ferries, the troubled operator that recently announced half-year losses.Shares in trendy mobile phone operators and high- street retailers proved popular with many of the competing teams, but the girls were careful to spread their risk exposure: “We looked for shares from a variety of industries,” says Katy Carmichael. Had the competition included the recent market surge, the girls would have booked an impressive 11 per cent profit, against the FTSE All Share’s 8 per cent gain.The girls scoured the market for companies with strong, recognisable brands that were undervalued relative to their competitors, including Vodafone, Gucci and Coca-Cola, which all turned in solid gains.

They invested a notional £100,000 in a fantasy portfolio of large and medium-size shares, monitoring their returns throughout the year. Their portfolio rose 4 per cent during the judging period, from October to March, while the FTSE All Share index was falling 11 per cent. “I have a deposit account for direct debits and other regular expenses, and anything left over will be saved in a cash ISA so I can earn a better rate of interest.”The club has spent the past year learning the fundamentals of finance and investing in stocks. The competition was invaluable experience for campus life as they head to university and a new set of financial challenges this autumn.”I’ve got it all sorted out already,” says Jennifer Anderson, a club member. As the Financial Services Authority prepares to call a “summit meeting” on financial education, one group of young people better prepared than most are the members of the St George’s School For Girls Investment Club in Edinburgh.
They recently returned from an all-expenses-paid trip to New York as their prize for winning the Student Portfolio Challenge, sponsored by Proshare, a City-based charity that providesfinancial education to schools. Recent announcements by the Financial Services Authority and the Association of Investment Trust Companies suggest that perhaps, at long last, this vital need is being seriously addressed Let us hope so. It is long overdue.Only when the investment industry’s sharks, charlatans and incompetents are faced by an informed and realistically demanding audience, will people be able to protect and nurture their savings with the right degree of confidence.w.kay independent.co.ukWilliam Kay is Personal Finance Editor of ‘The Independent’.

Aside from the issues of churning and dancing to short-term targets, fund managers have long been guilty of hiding in a herd mentality and contenting themselves with beating an index, rather than actually making or preserving customers’ wealth.Everyone has been at fault (yes, the press too), and not least the public. Don Clark, of the adviser Torquil Clark, told me this week that he had to pull a structured product because it did not promise as high a return as a rival’s, which could lose investors plenty if it went wrong.Too often the public are greedy and na?, a lethal combination that is the inevitable consequence of lack of proper financial education. He declined to say whether he was referring to the investment product providers’ own design and marketing departments, or the thousands of foot soldiers among the army of independent financial advisers.Mr Tomlinson’s contribution is particularly unhelpful because there have plainly been faults all the way along the line. To paint fund managers as holy innocents, toiling away in their garrets only to have their work sullied by others, is an absurd fantasy. There has got to be a lot of vested interests in there that are not in the best interests of the original investor. The whole process seems to be characterised by everybody being in there for the short term, not the long term.”Faced with the prospect of a severe caning, Mr Tomlinson has metaphorically stuffed a phone directory down the back of his trousers in the form of a remarkably complacent assertion that fund managers have done their best in some difficult times, and most certainly do not deserve to be castigated.Instead, Mr Tomlinson has tried to deflect the blame on to mis-selling, which he sees as the cause of most of the financial services industry’s problems.

What has that achieved over the past 10 years? Not a lot is the answer. If you invest money for the long term, why do you have to keep moving it around? About 80 per cent of it should go into stable, long-term investments that should not be churned at all. But no sooner was he selected in March by the think tank Tomorrow’s Company to lead an inquiry into the entire system of investment in the UK, than he was telling anyone who asked that he had already got to the root of the problem.He said: “We have all these fund managers devoting hundreds of thousands of hours a week moving stuff around in circles. But if we do have a floor under share prices, even if it is no more than 3500, it does give investors something on which to plan.* Lindsay Tomlinson, chairman of the fund managers’ club, the Investment Management Association, is someone who believes in getting their retaliation in early.Later this month, we can expect the considered views of Sir Richard Sykes, the forthright former chief executive of GlaxoSmithKline, on why savers in pension plans, unit trusts and life funds have had such a raw deal. It has been increasingly fuelled by borrowing, landing us with average debts of £7,000.The question is whether industrial growth can grow fast enough, soon enough, to take up the running as consumers run out of steam, particularly as they may face modest hikes in interest rates next year.That is why the bear is still twitching.