I am paid to be sceptical. Within investments, it is imperative to question why things are happening and to try to understand whether a growing trend is truly significant or just a shoddy bandwagon that merely fits the marketing zeitgeist.
My scepticism this week has found itself butting against ‘outcome-orientated solutions’ – a phrase that has almost become a living, breathing organism thanks to all the oxygen that has been expended uttering it.
When you hear something again and again from several fund groups, it is only natural to question the received wisdom. Bradley GerrardAt Aviva Investors’ briefing last week, its new chief executive, Euan Munro, unveiled the first of its Multi-Strategy Target funds. The company says these are – yes, you guessed it – ‘outcome-orientated’.
The phrase is not hard to find in recent press coverage – on our site and others. Several groups use it, including BlackRock, Aberdeen, Old Mutual Global Investors, JPMorgan Asset Management and Investec Asset Management. I could go on.
Just to be clear, fund groups can describe what it is they do however they like; I am not aiming to be irreverent. But when you hear something again and again from several fund groups, it is only natural to question the received wisdom.
But am I right to be sceptical?
I sought a ballast for my views in the form of OBSR founder Richard Romer-Lee, who now runs Square Mile Investment Consulting & Research with Nigel Whittingham, and I ended up realising that my scepticism might need to be tempered.
Mr Romer-Lee pointed out that for too long fund groups have been able to hide behind unclear objectives when the very thing a fund is trying to achieve should be “overt and able to be articulated clearly”.
“This will make it easier to see if a fund has delivered what it aimed to do,” he added. “Surely that must be the right way to help investors understand what it is we do.”
Having an outcome, Mr Romer-Lee argued, makes it easier for the average investor – and his or her adviser – to help produce a more solid financial plan. If you know what a fund is aiming to do, this can be matched against how much you can save, how your pension pot will grow and thus when you might be able to retire.
Mr Romer-Lee agreed that my scepticism was “natural”, but noted that the FCA is making the industry a more open and transparent place, one that is clear about its objectives. This is also something incoming IMA chair Helena Morrissey is keen to pursue.
And Aviva’s Mr Munro said “investors want simple and specific outcomes from their financial products”.
So, without fully relinquishing my position or being too stubborn, I’ll agree to put my scepticism on hold – for now.
It will be reapplied depending on the degree to which these funds miss their targets – especially in choppy markets during which their diversification is supposed to make them weather the circumstances better than their rivals.
Bradley Gerrard is news editor at Investment Adviser. John Kenchington is away
