In theory, the annual assessment of value reports that fund management groups are now required to publish by the regulator should highlight areas of investor detriment – be it continued poor (relative) investment performance, onerous fund charges or share classes that have discriminatory charges.
They do, but you have to dig rather deep to find such evidence.
Take M&G’s annual report. It is 416 pages long – nearly eight times the size of the equivalent report published by Artemis (53 pages) and ten times that issued by Columbia Threadneedle (42 pages).
Eight times, ten times the value? Not in a million years.
It is designed not to be read. It is not until you get to page 344 that the real juicy bit of the report jumps out of you: “We are unable to conclude that the fund has delivered value to its investors...The fund has consistently fallen short of its performance target and we have determined that action must be taken by M&G to ensure it is better placed to achieve its objectives going forward. For this reason we have rated the fund as ‘unsatisfactory’ for its performance.”
The fund in question is the £1.4bn M&G Recovery – a vehicle that has registered double digit losses over the past one and three years and single digit losses over the past five.
True to its word, M&G has now taken action by announcing that the incumbent manager Tom Dobell (a lovely individual) is leaving at the end of the year, to be replaced by Michael Stiasny.
The rest of the assessment report – bar black marks for two other funds – is as investor useful as a chocolate fireguard. Box ticking of the finest order.
It should not require assessment of value reports to get fund management groups to do the ‘right’ thing.
Just recently, Baillie Gifford trimmed the ongoing charges of its Global Income Growth and Responsible Global Equity Income from 0.57 per cent to 0.5 per cent.
This is despite both funds having deemed to be providing value for money in Ballie Gifford’s assessment of value report. The Scottish investment power house said the reductions reflected its commitment to “offer value for money to investors”.
More please. Plenty more. This should be the investment industry’s Holy Grail.
Jeff Prestridge is personal finance editor of the Mail on Sunday