• Home
  • Admin/Tech
  • Benefits
  • Buzz
  • DB
  • DC
  • Diversity
  • Investment
  • Law & regulation
  • Risk reduction
  • Events
  • Whitepapers
  • ESG spotlight
  • PPTV
  • Newsletters
  • Sign in
  • Events
    • Upcoming events
      event logo
      Risk Reduction Forum 2019

      The Risk Reduction Forum seeks to arm trustees and scheme professionals with practical insights around best practice, and takeaways they can apply to their own scheme

      • Date: 14 Mar 2019
      • Radisson Blu Bloomsbury, London
      event logo
      Rising Star Awards 2019

      Professional Pensions has launched its inaugural Rising Stars Awards to celebrate the emerging talent in pensions

      • Date: 27 Mar 2019
      • Proud Embankment, London
      event logo
      Defined Contribution Conference 2019

      This exclusive one day conference will provide a comprehensive overview of the evolving DC landscape, and examine how Trustees and Pension Scheme Managers can overcome the challenges they face

      • Date: 24 Apr 2019
      • The Bloomsbury Hotel, 16-22 Great Russell St, London WC1B 3NN, London
      event logo
      UK Pensions Awards 2019

      Make a date in your diary. These awards are the single largest gathering and a veritable 'who's who' of the corporate pensions industry in the UK.

      • Date: 23 May 2019
      • Hilton Park Lane 22 Park Lane, Mayfair, London W1K 1BE, London
      View all events
      Follow our Professional Pension Events

      Sign up to receive email alerts about our events

      Sign up
  • Whitepapers
    • How DC schemes can gain exposure to different asset classes in a low-return environment

      So far, DC plans have largely been focused on the onset of auto-enrolment and changes to the regulatory framework - be it the ‘charge cap,' ‘pension freedoms' or consultations around ‘value for money', says Annabel Tonry, Executive Director at J.P. Morgan Asset Management (JPMAM).

      Download
      Pension freedoms three years on

      In 2015 George Osborne, then the UK Chancellor of the Exchequer, decided that those age over 55 could take much more of their pension in cash. This has since opened up a range of possibilities for DC scheme members in the world of pensions.

      Download
      Find whitepapers
      Search by title or subject area
      View all whitepapers
  • ESG spotlight
  • Sign in
    •  

      You are currently accessing ProfessionalPensions via your Enterprise account.

      If you already have an account please use the link below to sign in.

      If you have any problems with your access or would like to request an individual access account please contact our customer service team.

      Phone: +44 (0) 1858 438800

      Email: [email protected]

      • Sign in
     
      • Newsletters
      • Account details
      • Contact support
      • Sign out
     
  • Follow us
    • RSS
    • Twitter
    • LinkedIn
    • Newsletters
    • YouTube
  • Register
  • Subscribe
Professional Pensions
Professional Pensions
  • Home
  • Admin/Tech
  • Benefits
  • Buzz
  • DB
  • DC
  • Diversity
  • Investment
  • Law & regulation
  • Risk reduction
  •  

    You are currently accessing ProfessionalPensions via your Enterprise account.

    If you already have an account please use the link below to sign in.

    If you have any problems with your access or would like to request an individual access account please contact our customer service team.

    Phone: +44 (0) 1858 438800

    Email: [email protected]

    • Sign in
 
    • Newsletters
    • Account details
    • Contact support
    • Sign out
 
Professional Pensions
  • Investment

The Belly of the Beast

Con Keating
  • Con Keating
  • 21 November 2017
  • Tweet  
  • Facebook  
  • LinkedIn  
  • Google plus  
  • Send to  
0 Comments

Con Keating has been hearing rumblings from within the beast that the FCA and DWP's work on disclosure templates is redundant and a waste of time and money

In high summer last year, the Investment Association (IA) published its infamous paper which made the preposterous claim that there were no hidden costs or charges associated with asset management, that these were the "Loch Ness monster" of finance. At the time, I wrote that it seemed to me that if the Investment Association had been swallowed whole by that monster, and lay decomposing in the belly of this beast, they might be expected to present that situation as the location, capture and domestication of the beast.

Recently I have been hearing rumblings, emanations from within the beast, to the effect that the problems of cost and fee disclosure were solved long ago by the Investment Association, that the work of the Financial Conduct Authority and the Department for Work and Pensions on disclosure templates is redundant, unnecessary and a waste of time and money.

Related articles

  • Good communications are more important than ever
  • Why should a rising star join pensions?
  • 10,003,000 reasons why AE has been a success
  • Guy Opperman: We have much more work to do on AE
  • It's time to get serious about sustainability

The Investment Association has indeed published sets of proposals, which are too extensive to discuss fully in a short article. However, there is one metric, their proposed portfolio turnover ratio, which illustrates the failings of the IA's proposals rather well.

This is the lower of purchases or sales divided by the average assets outstanding in the measured period. This measure is patently nonsensical. If we were to become bearish at a point in time and sell all of the fund's assets, while buying none, the reported turnover (and transaction costs) would be zero. Similar results apply on the bullish side. There is also the question of the stability of the statistic over time as the numerator switches from purchases to sales and vice versa. Simply put this metric is not fit for any purpose.

I know that it is mandated by the Securities Exchange Commission within the US, but as with all too much American, that just reflects the unbridled power of a monied special interest lobby group.

Use of this statistic in further analysis can result in some very strange empirical 'findings', such as: active mutual funds perform better after trading more and this effect is especially strong for small, high-fee funds.

We have long been accustomed, and perhaps inured to the pleadings and lobbying of trade associations, but we do need to ask where the line lies between valid motivated belief and wilful misrepresentation. In any circumstance, it seems to me that these latest emanations are shrouded in the rank odour of advanced decomposition, tinged, perhaps, with elements of fear.

Con Keating is head of research at Brighton Rock Group 

  • Tweet  
  • Facebook  
  • LinkedIn  
  • Google plus  
  • Send to  
  • Topics
  • Investment
  • Law and Regulation
  • The Investment Association
  • cost disclosure
  • Con Keating

Latest stories

A stack of newspapers
Five stories you may have missed this week

This week's top stories included Cardano announcing plans to acquire Now Pensions from a Dutch pension fund later this year.

  • Industry
  • 15 February 2019
RBS sign
RBS reports £100m GMP impact; slashes equity exposure by two thirds

Royal Bank of Scotland (RBS) faces a £102m impact on liabilities as a result of equalising guaranteed minimum pensions (GMPs), according to its annual results.

  • Investment
  • 15 February 2019
Pension Appointments Blog
People Moves Blog: Cambridge Associates hires investment director

  • Appointments
  • 15 February 2019
Good communications are more important than ever

Malcolm Mclean says getting the channels of communication right and engaging more openly is a good starting point

  • Admin / Technology
  • 15 February 2019
Back to Top

Most read

Rising Star Awards
Rising Star Awards 2019 - Shortlists published
Cardano agrees acquisition of Now Pensions
RBS sign
RBS reports £100m GMP impact; slashes equity exposure by two thirds
A stack of newspapers
Five stories you may have missed this week
Pension Appointments Blog
People Moves Blog: Cambridge Associates hires investment director
  • Contact Us
  • Marketing solutions
  • About Incisive Media
  • Terms and conditions
  • Privacy and Cookie policy
  • RSS
  • Twitter
  • LinkedIn
  • Newsletters
  • YouTube

© Incisive Business Media (IP) Limited, Published by Incisive Business Media Limited, New London House, 172 Drury Lane, London WC2B 5QR, registered in England and Wales with company registration numbers 09177174 & 09178013

Digital publisher of the year
Digital publisher of the year 2010, 2013, 2016 & 2017