Life after the fall

22 February 2010 1:02 pm

No two years are ever the same, muses the chairman of the curiously named fund manager Betelgeuse Investment Funds.

A year ago, it seemed as though the end of the world was in sight. Today, times might be tough but at least we are all still around. And investors are still buying funds. This industry that has served him so well over the years still has some life in it, he realises.

Perhaps the strangest thing is how short investors’ memories are. The rush into property funds a few years back turned out to be a pretty disastrous piece of timing as the economic downturn savaged commercial values. Yet prices are being bid up again as property managers seek to spend the money flowing back into their funds. And all this despite the absence of any true sign of an economic upturn.

Of course, the property situation is not quite as dire as that faced by technology funds when the technology, media and telecommunications sector bubble burst. The hysterical rush into high-tech industries at the end of the last millennium created overvaluations that could only be compared with Japan at the end of the 1980s. Technology, considered recession-proof, was anything but. The over-hyping of the TMT sector damaged a generation of investors who had excessive expectations for returns.

Today’s investor is typically more realistic - but more cautious, too. Never has the desire to protect through diversification been so strong. It means there are even more specialist skills needed in the investment fund world.

Equally, it means there is always a fund to promote, even if your core proposition is going through a bad patch. It’s an ill wind, thinks the chairman.

Looking at the sales figures for the year ended not so very long ago, he is struck by the rapidly changing shape of the investment market.
While advisers continue to exert a strong influence on which funds are in the popular frame, platforms and fund supermarkets are now wielding significant power. And as they develop and refine their fund selection tools, he sees this increasing further.

Then again, there are the banks, though they appear less of a threat than they once did. Aside from the distrust the financial shenanigans of recent years has engendered, the emphasis on in-house products has not delivered to expectations, so increasingly they are prepared to consider the wider market. Well, some of them are, anyway.

Still, he thinks, there are no guarantees in this business - no crock of gold at the end of the rainbow that will ensure success. Good fund managers with consistent records have been pulled down in the carnage that followed the credit crunch.

It is better to be slow and steady, he feels, but that would have been the wrong approach last year. Might it work for 2010? Of one thing he is certain, no one knows for sure.

In the end, all one can do is one’s best. Trying to be clever seldom works. Perhaps operating from a position of high conviction helps but even that is far from certain. This approach has helped elevate Anthony Bolton to near super-human status but it is impossible to predict whether his new Chinese venture will be successful.

Oh well, he sighs, best we just stick to what we are good at. That’s how long-term reputations are built.

Brian Tora (brian.tora@ centaur.co.uk) is principal of the Tora Partnership

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