It used to come through the post, now it’s all online, still the only correspondence most investors have with fund managers is through their monthly factsheets.
That goes for professional investors too; though you may be able to talk to groups on a regular basis, how often can you honestly say you get a chance to deal directly with the fund manager?
Platforms have revolutionised the way investors can buy and sell funds, and build portfolios, with relative ease. Still, there’s very little transparency as to what managers are doing on a week-by-week basis.
FTSE giants
There are advantages to this, of course. Fund managers should be left alone to get on with what they do best without constant interruption, or having to justify every one of their decisions. Still, in a week when Vodafone shares reached a 10-year high on the back of bid rumours, wouldn’t it be nice to know if your UK stock picker still holds one of the largest stocks on the FTSE?
Without wanting to put myself and fellow journalists out of the job, I personally would love to see fund managers communicate more readily and directly with their investors, or at least their advisers.
Yes, fund investors should be in it for the long haul, and not make rash decisions on the back of daily share price movements. Still, I’m not convinced that a monthly factsheet satisfies demand either. Let’s face it by the time you read that very document, it’s probably already gone through at least a week of scrutiny from the fund group’s compliance department.
I’m not necessarily calling for a roll call on stock holdings, perhaps just a weekly update of sector overweights or underweights. At least then when wealth managers go to rebalance their portfolios, they would have a better idea of exactly who’s holding what.
Similarly, I’m sure fund groups can do better than the vague obligatory 200 word update on the state of the economy that’s pride of place on many factsheets every month.
Satisfying demand
Harry Morgan, head of private investment management at Thomas Miller Investment, agrees with me. He talks of satisfying investor demand for more information with the need for “a short-term conversation without sacrificing your long-term culture”.
“While I don’t think fund managers can put out lists of holdings because there are market positions involved, there is nothing more boring than getting a quarterly review of the markets three weeks after the quarter has ended or getting a factsheet which is clearly out of date,” he says.
“If there is, say, an ISM services index number coming out of the US or similar, people need a view on that. I think investment houses and private client houses together are going to have to up the level of information and the speed at which it is released.”
In an age where the state of the economy regularly makes the front pages of our daily newspapers and their websites, and almost any question you care to ask is answered on some corner of the internet, it’s time for fund groups to reveal some of their secrets. After all, even George Osborne tweets nowadays…
