SOMETHING FOR THE WEEKEND
Transparency
I reported the other day on the fact that the world’s first transparency strategy summit was taking place at the House of Commons, organised by the Transparency Task Force.
The event went ahead as planned on Monday, and was attended by some key players in the UK pensions industry, including the Financial Conduct Authority and the Investment Association.
Multi-asset, multiple fees
I’m not a big fan, to put it mildly, of multi-asset funds, so it came as no surprise to me that latest research on this subject has concluded that these heavily marketed products are “systematically damaging” investors’ returns.
FinalytiQ assessed 65 different multi-asset fund ranges, based on charges, performance and the financial strength of the funds’ parent companies. The vast majority — no fewer than 58 of them — rated either fair of poor. Only one rated as excellent value for money, namely Vanguard’s LifeStrategy range, which is entirely passively managed.
Evidence-based persuading
Now you might think this one’s a bit off-piste for a blog about investing, but bear with me.
For me, basing how we live and work, and the decisions we take, on the available evidence makes perfect sense. As we’ve seen, it certainly works in investing. But taking an evidence-based approach can also greatly enhance our chances of success in all sorts of other activities.
Another subject that fascinates me as a content producer and marketing consultant is persuasion. For example, how do you persuade people to visit your website and, once they’re on it, to stay there? Ultimately, how do you convert them into clients?
Read the article and watch the video here
Complex markets don’t require complex solutions
Someone I’m particularly excited about meeting at the Evidence-Based Investing Conference in New York City in November is Ben Carlson. As well as being Director of Institutional Asset Management at Ritholtz Wealth Management, Ben also writes one of the best investing blogs on the web — the very aptly named A Wealth of Common Sense. Here he talks about his philosophy and, in particular, his belief in keeping things simple.
Lack of transparency is all about incentives
If you’re still in two minds about financial incentives in the fund industry, and whether or not the rewards for its senior staff have grown too large, you probably won’t be after reading the latest research on executive bonuses.
According to analysis by FTfm, in 2015, the CEOs of the biggest asset management companies in Europe and the US received bonuses that were on average 15 times larger than their salaries. James Kennedy of T Rowe Price was paid a bonus 24 times his regular pay; Larry Fink’s bonus at BlackRock was almost 30 times his salary.
Successful investing really isn’t complicated
In 2013, Harold Pollack, a University of Chicago public policy professor, was interviewing the author Helaine Olen about a book she was writing on the financial advice profession. To illustrate the point that too much advice is overly complicated, he grabbed an index card and wrote down nine basic financial rules that he had been living by.
When Pollack posted the card on his blog, it quickly went viral, and the reaction prompted him to co-author a book, with Helaine Olen, called The Index Card.
Also worth reading
Smart beta investors can be very dumb (Josh Brown)
The expensive lesson of closet indexing (David Foulke)
Ignore forecasts — they’re usually wrong (Larry Swedroe)
Does active managers really reduce your risk? (Phil Huber)
Why investors need to keep chipping away (James Osborne)
A prescription for a happy, successful financial life (Jonathan Clements)
What’s the most efficient way to capture the value premium? (Mark Hebner)
More indexing won’t necessarily create opportunities for active managers (Cullen Roche)
Remember, there’s always someone on the other side of the trade (Michael Batnick)
How passive funds have continued to smash their actively managed rivals (Ryan Vlastelica)
Finally..
Regis Media, which produces and sponsors The Evidence-Based Investor, is about to launch a brand new blog for advisers and wealth managers. Stand by for an announcement next week!
Robin is a journalist and campaigner for positive change in global investing. He runs Regis Media, a niche provider of content marketing for financial advice firms with an evidence-based investment philosophy. He also works as a consultant to other disruptive firms in the investing sector.
