I don’t want “active” or “passive” – I want value for my money Stuart!

Stuart Kirk , the journalist who fell out with ESG and the industry it has spawned is now being controversial for a living (rather than a sacking).

This week’s FT column finds him falling out with himself for being active in decision making on where his pension pot should be invested.

He’s not as hard on himself in the article as he is in the headline. In the article he just rails at the funds industry for not providing him with a ready made solution to his problem – managing a pension pot with funds available on a SIPP platform.

In all honesty, I don’t think he stands much of a chance of satisfying himself. He concludes, like many before him that he isn’t Warren Buffet and that he might as well plonk his money in the S&P 500 and walk away. Except he can’t do that as he’d be out of the column faster than Auguste Rodin at Epsom yesterday.

There are fund managers who are making returns for themselves but they tend to do this  for themselves rather than spreading the love. There are markets which are accessible to the likes of you , me and Stuart which don’t conform to the sorry trends he discusses (and they don’t include the 1.30 at Epsom Downs)

But these markets are for patient capital and can be accessed through the stock market as investment trusts and occasionally as attractively priced hedged funds like Ruffer.

They are most certainly uncorrelated to the market returns that Stuart Kirk tracks

Having spent a highly enjoyable but financially disastrous afternoon at Epsom, I am a little jaded, but I have come to the conclusion that the people who make money from racing are far removed from the punters queuing up at the Tote who are under-informed and under-rewarded for the risk they take (me included).

So I bet £1 at a time for the enjoyment of watching the horses career to the line , insouciant to their bearing my dreams on their backs.

I saw expertise at Epsom but in the shape of bloodstock agents , trainers and breeders. Getting them to share so much as a tip with me, was out of the question.

That is the problem Stuart has , I have and most like us have. We need to be on the inside of the ring – not staring at our investments from afar,

Getting inside the markets means having fund management that is managed by those people with a long-term view of what will deliver value.

These people need to be incentivised to manage money not on the basis of how a portfolio is working over the short term, but the value it delivers over time.

The assessment of that value is beyond me , Stuart and probably beyond you too. But it is not beyond the wit or man or woman.

I suspect that the answer to our problems is in the hands of the CIOs of the big workplace pensions – who are incentivised by the value they offer, as that is all they do. Boring as it might sound, we have more chance of achieving what we want from our savings from the Nest default fund than the portfolio offered by Stuart Kirk.

I don’t want activity, I don’t want passivity – I want good outcomes over time – value for my money.


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to I don’t want “active” or “passive” – I want value for my money Stuart!

  1. Stan Kirk says:

    My experience has been that low cost is hardly ever a predictive of performance. I note that Stuart’s portfolio is 100% in passives, across a range of sectors and asset classes. So the “active” part of his portfolio is in the asset allocation, not stock selection. It grieves me that passive advocates never admit that passive is parasitic. Like all parasitic activities, given sufficient volume will kill the host (or at least lead to massive mispricing and huge opportunity for “active”). More than 4 decades ago, John Bogle saw that risk, and his answer was “not yet”. I wonder how close we now are to passive participation becoming a problem. Also, the meaning of “active” is often misrepresented as meaning trading. The main activity vital for investment is brain power and price analysis in making the choice. Passive is buying something simply because it is there, whatever the price. Market pricing theory is that investors make informed decisions based on all the available information. The more who simply don’t care about price, the more mispricing will happen. Choosing a portfolio of well managed, profitable businesses and monitoring their performance for change is in the end, IMHO, not rocket science but when we have more funds than stocks, there is something inherently wrong with that.

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