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Another week passes and another headline appears announcing that a group of fund managers are moving to pastures new, furthering the game of musical chairs that we have seen as an increasing trend since the turn of the year.

Coupled with mergers and mega-mergers that continue to take place, where does this leave the poor investor who has put aside their hard-earned savings into a long-term contract that suddenly in the short-term is then left with a problem and a difficult decision following the exodus?

The marketing steamroller is very quick to exploit the star performer and promote the best-performing funds in general but we do not see the same activity when a major change takes place and investors have been left in a potential freefall situation without a parachute.

At a time when greater transparency and openness is needed, it is disturbing, therefore, to see that there are rumblings among some of the major investment houses protesting about the charges levied by Standard & Poor&#39s Fund Research which has become an accepted standard of external rating, providing some benchmark for the overall quality of a particular fund in its selected category.

The final decision is obviously down to the commercial judgement of an organisation and whether they see any merit in incurring the costs for this external rating. I do not know the sums involved but I am convinced that, in terms of an overall marketing budget, the spend is unlikely to represent a major percentage.

Because of the fund manager changes in particular and with the regulator moving to a new disclosure regime where past performance will not be considered an appropriate measure of a fund&#39s merit, the issue of a credible rating mechanism is moving up the agenda.

Every IFA decides his or her own selection process before making recommendations to clients and, cutting out those that use the flavour of the month approach, fund selection is a time-consum-ing business.

At one level, there is the general marketing information, which is then added to roadshow presentation, contact with the local regional managers and individual discussion with fund managers. Additionally, with the increasing use of technology, more background information is fairly readily available to back up the established printed statistics from various sources.

What this does lead to is a fragmented approach which ultimately will do the job but is not particularly consistent.

As the old saying goes: United we stand, divided we fall. We have seen in recent times that, with Aifa, once there has been general backing for a trade association representing the bulk of the IFA market, it is a voice that is listened to and, therefore, one where the IFA&#39s voice can be heard.

The same recognition for a recognised ratings agency is important for fund managers to retain their credibility which is not being helped by the many changes currently taking place and the increasing poor publicity relating to charges and performance.

IFAs need to be able to offer competitive products with a consistency of good per-formance and, if investment groups want us to promote their products, then they are going to have to be able to demonstrate the reasons why we should be supporting them and independent assessment is a vital part of that approach.

Nicholas Conyers is director of Pearson Jones


Aberdeen Asset Managers – The American Monthly Income Trust

Thursday, 12th October 2000.Type: Jersey based split capital closed end fund.Aim: Income and growth.Minimum investment: Monthly £50, lump sum £1,000.Place of registration: Jersey.Investment split: Ordinary income shares 45 per cent, bank debt 42.5 per cent, zeros 7.5 per cent, annuity income shares 5 per cent.Charges: Initial up to 2 per cent, annual 1.2 per cent.Commission: […]

AIB Govett Asset Managers – European Technology Fund

Friday, 13th October 2000.Type: Open-ended investment company.Aim: Growth by investing in European technology.Minimum investment: £500 lump sum, £25 a month.Investment split: Communications equipment 32 per cent, telecommunications 12 per cent, IT & consulting services 12 per cent, pharmaceuticals and biotechnology 11 per cent, media 11 per cent, capital goods 7 per cent, household durables 6 […]

National Mutual – Trustee Investment Bond

Thursday, 12th October 2000.Type: Unit linked bond.Aim: For trustees of pension funds investing for growth.Minimum investment: Monthly £200, single £10,000.Fund links: Balanced managed, stockmarket managed, global equity managed, UK equity, UK equity tracker, UK equity select, european equity, european equity tracker, european equity select, north American equity, north American equity tracker, north American equity select, […]

London Pacific Assurance – Guaranteed US Dollar Bond

Thursday, 12th October 2000.Type: Offshore bond.Minimum – maximum investment: $10,000 – $1,000,000. Term: Five years.Interest rate: 7.25 per cent gross a year. Return: Guaranteed return of capital at maturity plus yield of 7.25 per cent over the term.Commission: Initial 4 per cent.Tel: 01534 607780.


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