‘The active (fund) management industry does not add value after fees’ says Stuart Dunbar of Baillie Gifford according to The Financial Times.
This is a plea to the industry to get back to the fundamentals of long term investing’. And he adds that, except over the long term, the share price is almost an irrelevance.
He echoes the case made by leading fund managers in 2020 Stewardship in 2010 and the Stewardship Alliance in 2018.
Now we need to see action by the Investment Association It could insist that its members stopped advertising their funds performance over anything less than five years.
The Pensions and Lifetime Savings Association could strengthen its guidance and discourage pension trustees from reviewing quarterly performance and encourage them to issue longer term mandates.
Major investment consultants could equally discourage pension funds from frequent reviews of short term investment performance.
And the UK Government could create new investment vehicles as suggested by Tomorrows Company in Promoting Long Term Wealth.
Now that asset managers have got the message about the long term let’s align incentives and industry marketing with it.
This, and not tokenism around employee directors, is how to get companies to serve human purposes and capitalism to serve society.