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Brian Tora: The Budget should provide a boost for fund managers


With a sense of nostalgia, the chairman of the curiously named Betelgeuse Investment Funds closed the door to his office for the last time.

It had been a long haul – but worth it in the end. He could not complain at the final outcome, but it left him feeling a little sad that no more would he engage with regulators, marketing companies, internal sales staff and the intermediaries that provided much of the buying impetus for the company’s funds.

In the end, selling out had been a no-brainer. With annuity business likely to shrink in the wake of the pensions shake up, insurance companies were only too keen to bolster their fund management operations. And who could blame them?

Banks had blotted their copybooks at a time when the market for fund management and looking after portfolios for Isas and personal pensions had received a boost. The opportunities looked boundless for those with the skills and resources to pursue them.

He knew it would not be a one way street, though. Markets continued to prove tricky for even the most experienced of investment managers, while the lure of the boutique in which you owned part of the action would doubtless continue to stimulate revolving doors throughout the industry. This was, after all, how he had started out. Indeed, many leading firms today had been born in similar circumstances.

After nearly half a century in the investment business, it was probably time to bow out. Not entirely, though, he hoped. Feelers had been put out amongst his contacts in the investment trust world and he felt reasonably certain that some of the seeds he had scattered would find fertile ground. After all, this was a rapidly changing market too. If the RDR had accomplished anything, it had made certain investment trusts were no longer overlooked.

Perhaps they had been one of the main beneficiaries of the changes to the regulatory framework. If you measure success by the narrowing of the discount between asset value and share price, then they certainly had done well recently.

Not that there was any real evidence that IFAs had flocked to buy them. For many, understanding how they worked and carrying out proper research was a step too far. But DFMs used them – and they had benefited from the RDR.

Of course, as in any business, it is seldom a single event that changes the outlook, he mused. Investment trusts had become much more adept at managing discounts long before regulators clamped down on commission payments – arguably one of the main reasons IFAs shied away from closed ended vehicles. The use of such tools as share buy-backs, treasury deposits and savings schemes had already made a significant difference. He rather hoped a call would come to allow him to keep a toe in the investment water.

Glancing back at the dealing room where managers and analysts were still plying their trade, but for different owners, he couldn’t help but wonder if he was departing just when the industry in which he worked was about to receive a major boost.

Back a decade or so ago, there were plenty of pessimists around, calling the end of the cult of the equity. Baby boomers will be retiring, they said. They will be spending their wealth, not conserving it.

But life had changed so dramatically in the years since the new millennium came into being. Defined benefit pension schemes had become a thing of the past. People were working – and living – longer. And now personal pensions had been relieved of the shackles that tied them into annuity purchases. It could all prove very exciting.

As the lift doors closed and he made his decent to the lobby, he flicked on his electronic diary. Technology had wrought great change too. He could now make a video call to his son in Shanghai from his car if he wanted. The one thing technology couldn’t do, though, was to improve his golf handicap. At least he’d now have time to do something about that.

Brian Tora is an associate with investment managers JM Finn & Co



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