Today is a Transparency Task Force day and Andy Agethangelou and the transparent will be assembling at Pension Insurance Corporation from 9am. You can catch me on a CDC power panel at 4pm. I urge you to go- it looks an inspiring panel.
Talking of Transparency, I will be celebrating this evening , the sight of my inboxes clutter-free (unless I’ve failed to clear the hundred or so begging mails to stay in touch with “friends” I never had. I will be drinking in transparent emails with Taylor Wessing tonight.
In the meantime I’ll be helping Angie sort out some local difficulties with OMG and meeting with big Tim, who is our new main man on the DC front at First Actuarial.
All the time, my eye is set on the next really big milestone for Fund Transparency – 14th June – when Chris Sier and the Institutional Disclosure Working Group should be making the “big reveal”, the template that will allow us to see what we are really paying for fund and asset management.
And they’re re-exploring Loch Ness!
A New Zealand crew are intending to extract DNA from the depths of Loch Ness to put together the fragmented picture of Neanderthal loch life that might explain sighting of Nessie.
And they’re re-exploring Private Equity!
Meanwhile, in the State of Maryland USA, the state pension managers are trying to explain why the state pension fund has only delivered a 10-year annualised return of 4.3 per cent, below the 6.4 per cent return of a basic 60/40 index-tracking portfolio made up of US stocks and bonds.
It turns out a substantial proportion of the fund has been invested in “alternatives”. The Maryland Policy Institute accused the state’s pension scheme of paying an estimated $172m in undisclosed performance fees to all of its alternative investment managers, including private equity, hedge fund and commodity managers, in the year to June 30, 2017
The pension scheme countered by disclosing that they had only paid $49m in previously undisclosed fees and went on the offensive by threatening to up their holdings in alternatives. Much to the bemusement no-doubt of those paying state taxes.
We have of course been here ourselves, except the Railways Pension Fund, when it found it had been ripped off by its alternatives managers, made the fuss themselves, and are now Transparency Champs , not Transparency Chumps.
The next time you pay for your rail tickets, remember the cost savings are in your fare!
I think we’ll have more luck with funds than we will from Loch Ness DNA.
What Andy Agethangelou, the Maryland Policy Institute, the Railways Pension Fund and Chris Sier and the FCA’s IDWG all have in common is the pursuit of value.
Right now, value sits in the City of London , Canary Wharf, Mayfair and other similar financial fat-catteries around the world. Value does not sit in the Railwaymen’s pockets or the tax-payers of the State of Maryland’s pockets. indeed we pay more for financial services than we should, because there is no scrutiny from on high – to keep the costs down – or at least make sure there is value for those costs.
Which is why Andy Agethangelou is right to keep the debate at an abstract level. Because for all the taunts that he and the transparents get, they are changing the climate and that is changing the financial landscape.
What Chris Sier and his colleagues are doing is more than just abstract – his template is enabling first institutions and then (let’s hope) consumers, to understand what’s at the bottom of the Loch.
It may be grim and murky down there, but we all want to know Nessie’s DNA! We want to own the information on what we are paying for funds.