The Great Debate UK
from Funds Hub:
By Detlef Glow, Head of EMEA Research at Lipper. The views expressed are his own.
In the last decade investors and fund managers faced two major crises in the stock markets, the popping of the technology bubble in 2001 and financial crisis starting in 2006.
Portfolio managers suffered average losses of about 50 percent in the wake of both crises, leading investors to question what their fund managers learned.
A Lipper and Avana Invest study on the maximum drawdown of actively managed funds found that those fund managers must have introduced new risk management tools after the bust of the technology bubble. Still, they failed to meet investor expectations on managing risk.
Barclays has come up with an interesting way to solve an optical problem. Concerned that the bank's shareholders are nervous about possible future writedowns of wobbly assets with a value of $12.3 billion, it has sold them to its own employees.
This isn't necessarily a bad idea. But there are two things to dislike about this deal. First, it looks pretty cozy to sell to your own workers. And second, the deal looks potentially very favourable for the purchasers.
Sir John Ritblat, founder of British Land, was a believer in “buy and hold.” Fortunately for shareholders, Stephen Hester, brought in as chief executive ahead of Ritblat’s retirement in 2006, took a more active view of asset management.