Square Mile hits out at IMA for failing to defend active managers

Square Mile managing director Richard Romer-Lee has attacked the Investment Management Association for failing to stand up for active management as the industry comes under pressure to deliver returns at a cheaper price.

At a Schroders conference in New York, Square Mile managing director Richard Romer-Lee claimed the trade body could be doing a lot more to back up stock-pickers.

He said: “Where is the IMA standing up for the active management industry?”

Romer-Lee continued: “I find it extraordinary that a trade body that is there to promote fund management companies seems to be so supine in the media.”

The fund analyst highlighted there are “some very, very good active fund managers who can generate really very good long-term returns”.

He said: “If you think about it, most people do not have the capital they need to meet their aspirations, why wouldn’t they want help from active management?

“Yet we read in the papers, that active is not worth paying for, that they charge too much.”

The IMA however refused to get in a war of words with the fund analyst and declined to comment.

Romer-Lee pointed to research which highlighted that over the past five years the average actively managed UK All Companies fund has achieved a cumulative return of 68.8 per cent while the typical passive vehicle in the IMA sector has delivered just 52.7 per cent over the same period.

The analysis also showed however that the average North America active portfolio has returned 96.7 per cent over the past five years, versus a higher 109.9 per cent from the typical passive fund.

Romer-Lee also claimed some of trade body’s fund categories were something of a hindrance.

He added: “Nearly 20 per cent of the funds in the IMA universe are in two sectors – unclassified and specialist. That is not really helpful is it? I think it is a bit old fashioned and they could do some work on that.”