Relationship counselling: here are two further revealing questions from our survey
WHAT WOULD YOU LIKE FROM YOUR FUND MANAGERS THAT YOU ARE CURRENTLY NOT GETTING?
Seven funds sought lower fees and a five sought greater transparency on fees. “Greater consistency about how transaction and trading costs are calculated,” was how one respondent put it. Others wanted more honesty and for promises to be met. This was expressed as “more honesty when explaining poor returns”, “honest advice as to when we should take money away from them” and “there are instances where fund managers lose sight of the partnership and place short-term commercial interests ahead of long-term relationships”.
There was also the desire for more collaboration and understanding. Here is some specific feedback from respondents:
– “Consistent delivery of objectives.”
– “More original illiquid matching opportunities.”
– “Understanding of what we are trying to achieve.”
– “Portfolio cashflow analysis: expected income versus actual income, book versus market, year-on-year growth.”
– “Innovation.”
– “Capital preservation mindset.”
KEITH AMBACHTSHEER: IT’S VALUE THAT MATTERS
portfolio institutional showed the first 20 answers received in the survey to Keith Ambachtsheer, director emeritus of the Rotman International Centre for Pension Management at the University of Toronoto.
“Out of the asset owners who wanted something from their investment managers they are not getting, 10 wanted lower fees, five wanted more fiduciary behaviour and five wanted more value-for-money,” he observed. “I am with the five value-for-money respondents, it’s not what you pay that matters, but what you get for what you pay.”
DESCRIBE YOUR IDEAL RELATIONSHIP WITH A FUND MANAGER
Eight out of the 26 funds who took part in the survey used the words ‘partners’, ‘partnership’, ‘equal footing’ or ‘collaborative’ when describing their ideal relationship with a fund manager.
These eight funds further defined this as “mutual understanding of needs”, not wanting to be viewed as a “source of money upon which a fee is levied”, “an alignment of interest” and a “collaborative relationship where they honestly tell me about the opportunities in the market place”.
A couple of respondents wanted a less rigid off-the-shelf deal; one sought more “flexible mandates” and another wanted “receptiveness to hearing feedback”. Others expressed their desires in terms of the communication with the fund, calling for more honesty and openness. This was expressed as “user friendly information”, “known to me so I have a direct relationship”, “knows what I want and does not try to sell things I have no interest in” and of “good moral fibre”.
One fund wanted it all, stating that a fund manager relationship should be “collaborative, open, intellectually challenging and low cost.”
