“I’ve run a country but I’ve never run a newspaper.”
- Quote attributed to former chancellor and model of humility George Osborne, who has just been appointed editor of the London Evening Standard.
“Most of the commentary in the UK press since the announcement of the “merger” of Standard Life with Aberdeen has focused on job losses in the City or the degree of power each set of shareholders might have. What about the most important people affected by this deal, the investors whose money both manage?
“Little” Aberdeen is well known for its dominance in Asian markets, but it already has a reputation for being too large to manoeuvre. This is widely believed to be one of the factors in the withering of its performance in recent years and other managers have frequently gained by avoiding stocks dominated by the behemoth funds. Now it is to add yet more firepower, controlled by fewer minds in concentrated groupthink. How can this improve performance? And what of client servicing? If your fund manager has £600bn under management, how large does your own personal portfolio need to be for the company to care if you are displeased with them in some way?
“The City agonises about how it might restore ethical behaviour to its participants. Well, here is a suggestion: block this merger and make all future ones consider the impact on fund performance across the majority of accounts by client numbers (not assets under management, which favours just a few sovereign wealth funds).
“The money we manage is people’s hopes and dreams. We seem to have forgotten this. If we keep allowing mergers to create groups so large that they are unable to perform and simply dismiss their real owners, we can only dash those hopes and trample on those dreams.”
- Letter to the Financial Times from Sally Macdonald, Stevington, Bedfordshire, UK, 18 March 2017.
Another letter to the Financial Times this weekend also makes for interesting reading. A correspondent “looking for suitable funds to invest in” asks Lucy Warwick-Ching in FT Money whether there is a league table for the total charges levied on “all the leading general managed funds”. Assessing genuinely comparable funds on the basis of their fees is entirely legitimate, but ranking disparate funds primarily on the basis of cost is altogether more questionable.
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