Royal London Asset Management says it “perverse” that the fund management sector sells itself on performance.
Speaking at the Hermes Global Investors Investment Conference last week, chief investment officer Robert Talbut said: “It is important for asset managers to admit they do not really know what will happen in the future.”
He argued there was a “gravitational pull” towards the fund managers that are the loudest and more assertive about what the markets have in store.
Talbut said: “It seems perverse the asset management industry sells itself on investment performance which history tells us is almost a random event. We should be sceptical about the promises being made.”
Hermes Global Investors chief executive Saker Nusseibeh says: “We are in the business where people always pretend they know the answers. This is a ‘guestimate’ business. Not only do you have to admit you do not know the answers, you also have to look at where else you can add value”
Westminster Wealth Management IFA James Gardiner says: “No matter how good the analysts are, there is no way of predicting what is going to happen. I think perhaps a lot of big institutions, through their marketing, highlight the good news more than the bad news. Instead it needs to be warts and all.”
Gardiner argues that investors want more feedback from fund managers on the downside investment risks, saying “investors are savvy enough to try and dig down a bit deeper.
He adds: “Since RDR, clients take more interest in negative connotations of what they are buying. It would not hurt if more fund managers were more forthcoming about the downside.”