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If I Were Rothschild

If I were Rothschild I would invest in Remco20, a mutual fund offered by the Ramco investment firm. Why? Because from 1996 to 2005 it returned 391.3% in nominal terms.

Yes, almost 400% over ten years. One can fairly call it the best-performing mutual fund in Israel.

Ramco20's achievement was not unique. Two other mutual funds did extraordinary well in the last decade. One is "Flexible Analyst", the most famous mutual fund in the most famous mutual fund management company in Israel. Flexible Analyst achieved a return of 383.7% in ten years. The third-best performer was DS-Capital Shares, which returned 371.3%.

During the decade, the stock market returned 321%, by the way. Ramco20, Flexible Analyst  and DS-Capital Shares therefore returned 50% to 70% more than the market during those ten years. That is 2% overperformance a year which over ten years, builds up.

These figures show how important it is to plan for the long run, not the short one. A fund that does well in the short term may not do well in the long one.  Only long-term success can justify investment.

The real gauge of success for a mutual fund, and the quality of its management, is how well it does over years. Does it consistently beat the benchmark index for five years or more?

That is the test that weeds out the wheat from the chaff but very few pass it, and justify the management fees they collect.

TheMarker ranking of mutual funds looks at them in one year, 2005, and also over five years, from 2001 to 2005. As TheMarker has been tracking these funds since 1999, it is fair to say we have an idea which have been beating the market from 1995.

Ramco20 managed to beat the benchmark indexes in each of five years, from 2001 to 2005; in practice it beat the indexes from 1997. Flexible Analyst has done even better, beating the benchmark indexes from 1995.