As outgoing chief executive Richard Saunders put it on Friday: “The need to rebuild investor trust is seen as a key issue for the industry. A decade of poor stock market returns, combined with ageing populations across the globe, is sparking debate everywhere about how to foster long-term saving”.
Those poor returns are highlighted by Enhance Investments’ latest monthly update, which merges five years of market data.
Of its selection of major global indices – including the FTSE 100, MSCI World, S&P 500, Euro Stoxx 50, Dow Jones Credit Suisse Hedge Fund and S&P Global Property – only the Citigroup UK World Government Bond Index (49.29%) has beat 1 month Libor (9.48%) since October 2007. The equity indices all registered a negative return over the period.
Good timing
Performance is one thing, though Godfrey may feel blessed that just one day after his appointment was announced, the release of IMA fund stats for September showed that sales of equity funds have beat those of bond funds for the first time in 12 months.
Not that we’ve got anything against fixed income though, as I argued last month, the basis of the reputation of many of this industry’s ‘star’ managers is based on delivering stellar growth through stockpicking. Risk assets are still the sexier choice, and that’s what will pull in the big investors when the next bull market inevitably arrives.
To be fair to retail asset managers, the poor reputation of financial services is not really their fault, but more to do with the reckless bankers that got us into this mess in the first place. We all suffer the same consequences though.
Household names
Saunders’ contribution to the industry should be celebrated and, despite its often prickly exterior, the IMA has largely delivered in protecting its members’ interests. Perhaps its next step, under Godfrey’s guidance, should be to build its profile as an organisation with consumer groups and to determine firsthand why people may have lost faith in financial services.
Fund groups have largely done a good job in building their brands as household names up and down the country, but how many investors know of the IMA’s stated purpose to “seek to improve the financial outcomes for customers”?
