James Coney  

Navigating one’s way through chaos

James Coney

James Coney

But who knows really what strategy is right?

The most important skill at this time, now the market has calmed, is not sounding like some kind of investment genius; it is communication.

The high cost of trackers

Like almost anything it does, the move by St James’s Place to offer passive funds has sparked much debate.

It is wise of a restricted advice company to offer as much choice as possible, particularly in a world where passive investing has so many fans.

But we all know the mantra with trackers: they have guaranteed underperformance.

We have not precisely seen the fee structure for the SJP trackers yet, but any upfront charge on investing (particularly if it is going to be 5 per cent) will be hugely punitive and wipe out years of returns.

I have had enough dialogue with SJP over the past year or so to have an idea of what they will say. We are likely to hear arguments that you cannot compare the cost with traditional trackers because SJP is a different model, that one tracker will be part of an entire portfolio, and that the cost represents a much bigger service offering.

Whether you take the SJP fee as the quoted 5 per cent, or the 2.9 per cent it says is the average (the industry average quoted upfront fee is between 2.5 per cent and 3 per cent) – whichever way you cut it, the upfront charges still seem very expensive, and startlingly so if you then invest mainly in trackers.

Narrowing the gap

In it together? Pah. (And I am not talking about Dominic Cummings).

Rishi Sunak has made it clear we must level the playing field so everyone pays equally to get us out of this mess.

So I have one suggestion: scrap defined benefit pensions in the public sector: they cost £13bn a year.

That will help narrow the gap.

James Coney is money editor ofThe Times and The Sunday Times