Credit fund managers for communicating in volatile times
Managers have been better at communicating during the eurozone crisis than the credit crunch.
Fund managers have come in for some flak recently for their communications and tendency to be ‘cautiously optimistic’ about the prospects for their own funds.
But are such criticisms really borne out by what is happening on the ground?
It certainly isn’t all about hot air and marketing. The long financial and economic crisis has tested the mettle and the relationships of just about everyone in financial services, including the key relationship between investment advisers and their clients. But this is also an important issue for the fund managers recommended by advisers.
Many active fund managers attempt to time their investments to fit with market movements - why shouldn’t they explain their rationale for doing so?
Advisers tell me that until now, clients have for the most part been prepared to weather the storm and have taken the lessons of diversifying their investments and holding them for the long term on board.
But now advisers say many more clients have been getting in touch expressing their fears of a eurozone break-up and what it might mean for their portfolios, going so far as to ask if they should be going defensive. In such circumstances, clear analytical communications from fund managers become essential.
A good case can already be made to say that fund managers are doing their utmost to help advisers explain what is going on.
This is in stark contrast to the situation following the collapse of Lehman Brothers and the near collapse of AIG. At that time, it felt as if retail and institutional financial services had been stunned into silence, with very few notable exceptions. However, as the eurozone chapter of the crisis continues, many fund management groups have raised their game. It is safe to assume that most investment advisers have also improved things, albeit a little less publicly.
Commentators
In terms of individual commentators, there is now also a range of economists and fund managers who should get credit for explaining the events of the day.
Any list should include strategists and economists such as Philip Poole at HSBC and Simon Ward at Henderson. Among fund managers, Argonaut’s Barry Norris and PSigma’s Bill Mott have been outstanding. Newton’s and Schroders’ communications are highly rated by many journalists I have spoken to.
It almost goes without saying that Templeton’s irrepressible Mark Mobius sets a standard in communication about the shift in the economic balance of power as well as in fund management. And if you want to test the received wisdom of politicians surrounding the eurozone crisis, then financier Terry Smith should be required reading.
Not all analysis is quite so successful. Whoever coined the term Piigs as an acronym for troubled nations Portugal, Ireland, Italy, Greece and Spain has come up with a shorthand term that detracts from our understanding by suggesting that all these countries are suffering from exactly the same malaise.