Philippa Gee: Why do funds clam up when performance sours?


Most investment funds go through interesting times and even the most highly rated funds have their difficult phases, perhaps because the market has moved against them or their long-running stock picking success has hit a wall.

While virtually all funds share this common issue, they differ considerably in how they then deal with the problem, which will in turn have an impact on the support they receive.

The manager who holds up his hands and acknowledges the issue gets a tick in the first box. The manager who then identifies specifics about the problem and sets out a strategy, which they feel will return the fund to its normal health and the timeframe for achieving that, gets another tick. The fund manager who communicates this openly and effectively gets another tick – in fact a full house.

Instead, the fund manager who defends their position with “it’s not me, it’s everyone else” gets no such tick. Also, the fund manager who refuses to alter their position or fails to acknowledge any fault does not get any tick. Then the fund manager who doesn’t see any reason to communicate to their supporters or investors and sits tight loses a third and final tick.

It’s not about us having unrealistic expectations of what a fund manager can achieve, but if you want us to stay with you on the journey, just remember that contact shouldn’t be just in the good times, but it is almost more important when the challenges turn up.

Philippa Gee is managing director at Philippa Gee Wealth Management