The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."
Monday, July 16, 2012
AFR editorial delivers right hook to "active" fund managers
It’s no surprise that the average Australian share fund manager struggled to match the performance of the S+P/ASX 300 Index in the year to June 30. It has been apparent for some time that the industry grew fat off the stockmarket boom of the 20 years preceding the financial crisis rather than due to any great skill on the part of the bulk of its employees.
Without doubt, there are exceptional fund managers who can do extremely well for their clients. But the problem is that they are outnumbered by mediocre performers who know how to ride a boom but lack the prowess or gumption to make gutsy calls in flat or down markets and instead choose to follow the herd...
The cult of equities that pervaded the Australian psyche in the boom years has faded as institutional and small investors alike awake to the reality that shares have bad years and a portfolio needs defensive assets to cushion the impact of the blow.
Individual investors probably withdrew $800 million to $1 billion from share funds in each quarter of 2011-2012 financial year, according to research house Plan for Life. This realisation that shares are just one part of a portfolio and do not rise relentlessly will inevitably mean there is less business to spread between the many fund managers in operation in Australia.
As in nature, only the strong will survive.