Prince Charles royal ruckus for fund managers saying that short-term thinking was making their brand of capitalism increasingly “unfit for purpose”

Last updated: October 18, 2013 2:03 pm

A right royal ruckus for fund managers

By Neil Collins

Prince Charles’ criticism likely to be shrugged off

The Prince of Wales may know as much about finance as the average fund manager knows about the royal family but sometimes he’s uncomfortably close to the truth. This week he told the National Association of Pension Funds that short-term thinking was making their brand of capitalism increasingly “unfit for purpose”. This irritating, overworked phrase aside, there’s a serious problem here, although short-termism is a symptom rather than the cause. The malaise in this industry can be easily summarised: too many coins are sticking to the shovels of the managers and the brokers. Since they designed the model, this is hardly surprising: they get paid whatever happens to the fund being managed. There is the nuclear threat of losing the mandate but generally only prolonged poor performance allied with no convincing case for improvement causes the bomb to be dropped. Running a fund is so lucrative that there are four pages of them in your weekday FT and little more than a single page of the underlying stocks that the funds trade. Describing this problem is easy; breaking the model is much harder. The Kay report recommended scrapping quarterly reports and greater engagement by fund managers with companies. It singled out Neil Woodford as the model manager. Unfortunately, Mr Woodford has now left the big fund he ran and the response of the average manager to the royal criticism is likely to be: why should I bother?

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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