Neither Sean nor Magnus held back with their criticism and comments and pointed at Allan Gray, Coronation, Ninety One and others by name. It is important to note that not only a select number of large fund managers incorporate performance fees, but many small managers in SA also adopt the same strategy. I am therefore not sure why certain large managers were singled out by name.
Both Magnus and Sean will be guests at the upcoming conference of the other publication where Sean is the keynote speaker. The resultant video and interview that did the rounds last week went viral and several of our clients confronted us asking for an explanation and a view of the comments made during the interview. Congratulations to Sean and Magnus, mission accomplished! Clients now know how “bad” the big boys are and how terrible performance fees are.
To start with, I would like to say that I am deeply disappointed by the large fund managers who have remained mum on these comments and the report. Only PSG contacted Alec Hogg, the editor of the other publication. All others seem to believe that by keeping quiet the comments are going to disappear or they are comforted by the large number of funds they manage, or they hope that someone like myself will stick out their neck to defend them.
The message seemed to home in on the massive income the large fund managers earn from their fees. Two points on this. The large fund managers grew large by providing returns that investors are happy with. If this was not the case, they will become small managers very quickly as history has shown. Secondly, investors invest with whom they want. The large managers don’t hold anyone to ransom, nor do they “incentivise” anyone to place business with them.
Facts and figures are current as on 26 August as per Morningstar and the funds referred to are Balanced Funds.