“Do you know the absolute worst thing about being part of an enthusiastically backed investment trend?” asked the chairman of the insignificantly-sized investment company Kermitted Asset Management when we caught up the other day. “You mean a bandwagon?” I checked. “If I had meant ‘bandwagon’, I would have said ‘bandwagon’,” lied the chairman primly.
“But I meant ‘enthusiastically backed investment trend’ and my question was whether you knew the absolute worst thing about being part of one.” “Is it that, eventually, so many musicians have joined the band on the wagon you can no longer pick out individual players within the general din?” I suggested. “No,” snorted the chairman. “It is that it’s so very hard to stand out from the crowd.”
“Potayto, potahto,” I shrugged. “After all, it’s also very crowded on the wagon and presumably, when enough people have jumped aboard, everything just grinds to a halt.” “I know what you’re doing,” grumped the chairman. “You’re trying to paint Kermitted as some sort of froggy-come-lately to the responsible investing party but, be honest now – we beat loads of people through the door.”
“No arguments there,” I conceded. “To be honest, I really thought you’d missed the boat – sorry, wagon – when you launched the new venture at the start of 2020 but evidently I hadn’t clocked all fund groups queuing for the port – I mean … where do wagons leave from?” “Don’t ask me,” shrugged the chairman. “This isn’t my increasingly tortured metaphor.”
Read more from the chairman (if you can face it): Tick, Tick, boom
“The point is,” I ploughed on, “not for the first time, I managed to underestimate the fondness of Her Majesty’s financial services for a good story – and ESG is clearly a good story.” “The best,” agreed the chairman enthusiastically and, I suspect, somewhat ambiguously. “So why are you being so unsupportive of our efforts, here at Kermitted.”
“I wouldn’t say a couple of digs counts as unsupportive,” I protested. “It’s not just that,” the chairman continued. “What about our latest fund launch, which received absolutely no acknowledgement in any of the magazines you allegedly look after?” “Given the nature of the fund, you didn’t think it was appropriate it received net-zero column inches?” I laughed.
“That’s not funny,” grumped the chairman. “I’m pretty sure it is,” I countered. “Still, to offer a more serious answer, do you know how many ESG-oriented fund launches we received the week you sent your press release through? Put it this way, by the Tuesday lunchtime, we had hit double figures and counting. Does that give you some sort of context?”
The chairman went quiet. “I don’t think a couple of paragraphs would have been too much to ask,” he said eventually. “I mean, if we spend five minutes rebadging an existing fund, the least you can do is spend five minutes writing about it.” “I’m not sure that’s your greatest argument,” I said. “Believe it or not, though, I really do sympathise with the task now facing the true believers of responsible investing.
“As I was saying to the boss of one of your rivals only the other day, ESG-oriented asset managers are having to achieve cut-through with end-investors on at least two extra levels. Not only do they need to persuade punters of the merits of equities and bonds over the various charms of, say, crypto, NFTs and meme stocks, they must also convey precisely what they mean by ‘ESG’ and what they stand for as a specialist in the field.”
“Exactly,” sighed the chairman. “So what sort of chance does that give us?” “I guess it gives the aforementioned true believers a shot,” I replied. “If the history of investment tells us anything, it’s that, when things get tough, people can fall off the you-know-what just as quickly as they clambered aboard– and, as I say, making yourself heard above the green noise is going to be very tough indeed.
“I suspect the winners will be those spreading the ESG message day in, day out – incidentally, standardising and simplifying that message along the way – and largely backing up words with deeds. In effect then, all Kermitted Asset Management has to do is practise what it is preaching. “See?” nodded the chairman. “You can be funny when you try.”
