How local asset management has changed in 20 years

Active investment management is appealing, at least in theory – appointing financial experts that will be managing your hard-earned monies and who will make the tough decisions allocating it according their best views to maximise returns through time, given your pre-determined risk profile (tolerance and capacity). For that service money managers charge you management and transactional fees, and often “outperformance” fees – sometimes masqueraded in different forms and shapes, but at the end it all boils down to the same thing – it will detract from your portfolio returns over time. That nett return may still be good, like above-average, but chances are that “heavy” investment cost burdens will dump you in the below-average spectrum over time.

Investment managers typically measure themselves against some sort of pre-determined benchmark – which is often calculated assuming no costs (management and transactional) – thus, managers’ performance must overcome their cost hurdle first, before comparing themselves with a selected benchmark. Alternatively, they may compare themselves with their peers operating in the same investment categories. But some managers are structurally more expensive than others – either by choice/design or perhaps they are managing smaller pools of monies, hence higher operational costs. Thus, there are “expensive” managers and “simple fee” managers. We know in the real world we mostly pay up to acquire top-quality goods and services, but it is much less sure whether the same “rule” applies or should apply in the investment world!

The bottom line is while many managers would like us to focus on their expertise and investment processes as a proxy for their skill and the definite reason why you should make use of their services, costs do matter in the final analysis. It’s not the same as buying a sports car and then complaining about the high insurance costs or fuel consumption of the car afterwards – you should have known about those things beforehand, but the utility (thrill of the car’s performance) you derived from driving this vehicle may overrule its running cost concerns, therefore you keep it. Thus, in the driver’s mind the joy of driving exceeds the costs thereof. In the rational investment world, however, the only thing that matters to investors is simple: what returns accrued nett of all fees to their investment accounts – in fact, there are not a positive and negative side that can be weighed up against each other, but only one side to it and one outcome.

Sex & Investing

March 14, 2019 SAindexinvestor Publications

Well, there may be many instances where I do not possess prescient knowledge, but I am confident that this article heading will attract a lot more attention (or in internet parlance known as “hits”) than my usual boring or business-like topics. But no, I am not in search of some cheap sensation or instant “fame”. My intentions are innocent insofar I am referring to gender differences in investment behaviour among men and women. Thus, I regret to downsize any heightened expectations readers might have had, but I shall try my best to keep it an informing five to seven minutes, well depending on your speed-reading abilities, of course…

I must confess, however, the heading sounded appealing, if not somewhat daring, because these two words are not often mixed together in one sentence. Yet, if you like to believe someone like Sigmund Freud the unconscious mind and basic human motives indeed play a major influence in our daily activities and decision-making. Not surprisingly, some of the gender differences in investment approaches can likely be attributed to the differences how men and women perceive their respective roles in relationships and society.

Investment perceptions about women are rife with stereotypes, but diligent research indicated that many of these stereotypes are unfounded. In fact, if everything, women’s approach to investment decisions generally are more likely to lead to successful investing in the long run.