Performance in fund management must stay clear

When I started out covering finance in August 2007 it was an exciting time. News about Northern Rock was exploding all over the financial pages, as the FTSE 100 teetered around the 6,000-point mark.

Its subsequent collapse to 3,530 points was a spectacle to behold. Two of the UK’s biggest banks collapsed into state control. Dozens of firms followed suit. We lost Woolworths and the high street changed beyond recognition.

We got the Bribery Act, which has changed the cultural fabric of the City and finance. We got capital adequacy requirements, Libor-fixing prosecutions and quantitative easing.

In our world, the complex failures of Keydata and Arch Cru are both yet to be fully resolved. We lost New Star Asset Management, Gartmore and Swip among others, and gained Woodford Investment Management.

Some firms, M&G Investments in particular, have prospered in Europe thanks to the continent’s fund passporting system. Many others are becoming equally as international in focus.

Passive investing has come to the fore as investors look to control their costs, while active management has turned more to outcome-focused strategies to justify its premium prices.

We have had the RDR, and all the arguments, debates, political and regulatory discussions thereof. I remain convinced it was the right thing for financial advice, although that view has at times not always been popular.

Who out there, if they really asked themselves, would today opt to go back to those days before all this change?

I remain convinced the RDR was the right thing for financial advice

While so much of the world of finance has altered, what is good about it has changed very little.

It is a competitive industry. The people you deal with are intelligent and articulate. Almost everybody I meet is clearly ambitious to do well for themselves by doing well for their customers.

In asset management, performance has always been king and it remains so today. Fund managers know they live and die by the numbers that are ultimately delivered to their clients, and net performance figures are still definitive – they do not lie.

So I would like to leave with one final call.

The industry continues to innovate for the new pensions market – with millions effectively taking over responsibility to save for their futures from their employers and the government.

But with this opportunity comes responsibility, and the industry must remain true to its focus on monitoring and disclosing performance clearly.

Investors must be able to tell easily who is delivering the goods and who is not, no matter how individual the outcomes they are trying to achieve.

How, and whether, this is achieved could well be the tale of the next decade in asset management.

John Kenchington is editor of Investment Adviser