Asset managers love to talk up transparency. Yet they also like to talk down transparency when it applies to them.
This is particularly true of the Alexander Forbes Manager Watch, which often exposes some inept portfolio management.
It gives investors an idea of what returns have been achieved by funds in the same category. I know many fund managers turn their noses up at a peer-based review.
Like my friends at Momentum, or should I say MMI or Metropolitan or perhaps Multiply or even Guardrisk, they prefer the idea of being judged against a target rather than a competitor and, with a bit of luck, on a "long-term basis". The new name for long-term investment seems to be outcomes-based solutions, and Momentum’s Sonja Saunderson can convince you that it doesn’t matter if you beat the peer group or not, just whether the client can meet his or her liabilities.
What scares me is remembering what a disaster outcomes-based education turned out to be. Will this catastrophe be repeated?
Would Momentum be punting outcomes-based investing if it still had a competitive peer-based asset manager?
That said, it has recently done quite well with the MMI Global Balanced fund, with a respectable 9.7% return over a year, ahead of the highly regarded Prudential team. But MMI has lost an enormous amount of talent over the past few years, most recently the media-savvy Wayne McCurrie.
Maybe MMI should have rehired the bulk of its old team by simply buying Truffle Asset Management where Charles Booth, Iain Power, Nicole Agar and many others work.
In any case, have you noticed how many managers with atrocious results claim to be long-term investors?
I would love to let everyone down by never producing work on time, staying only a short time in the office and insisting that my boss should take a long-term approach and let me off.
Or imagine a cricketer insisting, after a series of ducks, that fans and selectors take a long-term view?
Does Stanlib have excuses for being bottom of the Global Large Manager Watch over one, three and five years? Of course they do, and one of them is that they are long-term investors.
One day at a time
But investment is all about eking out a living one day at a time. It is a culmination of short-term performances.
I can put up with some mediocrity so long as it is counter-cyclical with another manager with which I am invested.
Our pension fund is invested with Allan Gray and Investec. Investec was very strong in the previous 12 months as well as the one before that. Allan Gray has had a fantastic past 12 months with a 17.1% return, after two soggy years. Over three years Allan Gray and Investec are neck and neck, with Investec just 0.2% ahead.
The mediocre performance of Absa Asset Management has been disappointing. I believe they have taken responsibilities away from that unlikely superstar Errol Shear, instead of giving him the time he needs to get some decent runs on the board.
If Absa is going to stay in asset management it needs to invest in new talent and stop running the business on a shoestring. And why does it insist on keeping its exchange traded funds business separate?
It is also an asset manager, after all, so why duplicate resources?