Two funds to shake-up the fund management industry

Merryn Somerset Webb looks at two new funds which, while they are in no way perfect, aim to shake up the complacent fund management industry.

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The fund management climate is improving, but it still isn't good enough
(Image credit: 2015 Getty Images)

Last month, over lunch between shows at the Edinburgh Festival and well into our table's second bottle of ros, I gave a friend a list of the things that make a good fund manager (never let it be said that I don't get out much). There was one thing on the list that he thought was particularly brilliant. But later he forgot what it was, and sent me an email asking me to recall.I've been trying to remember ever since. Was it having an all-inclusive fee one that incorporated even trading costs? An annual meeting to which all individual investors are invited? A concentrated, high-conviction portfolio? A stepped fee (falling as the fund rises in size)?Is it a clear investing style (one that does not change constantly)? Skin in the game? Or an understanding of the long-term role of the fund manager as a steward of the corporate world and by extrapolation of national social cohesion?Could it have been having an active share of over 90% (this just means it doesn't track an index)? Or a willingness to turn up at AGMs and vote down silly pay packages (even if it turns attention on to fund managers' pay)?We haven't remembered the final piece of brilliance yet, but in the making of the list we have agreed that it is increasingly odd that the industry seems to make something that seems so simple (if not easy) from the outside so insanely complicated. Why not run a cheap fund concentrated with conviction and an eye on the social implications of corporate behaviour? How hard can it be?On the plus side, in the heart of its quite dark heart, the industry knows it isn't good enough which is why you will notice two of its heavyweights striking out alone this week. You would have thought that having co-founded Hargreaves Lansdown, made a proper fortune and stepped out of the limelight (bar a little well-justified Brexiteering) Peter Hargreaves would have found it pretty easy to find a suitable home for all his cash. (There are, after all, more than 2,500 funds listed on the Hargreaves Lansdown website alone). Not so.This week, along with fund manager Stephen Yiu, he has started marketing a fund that will manage a "substantial portion" of his own wealth, the CF Blue Whale Growth Fund (the offer period starts on September 11). It will have a concentrated portfolio of 25-35 global stocks chosen without reference to any particular index; an annual management charge of 1% (1.24% all in); and initial focus on investing in the US.British investors, Hargreaves tells me, are pathetically parochial in their investing. We always think the US is too expensive and have therefore "missed every US boom in history". Where you and I see insane prices driven to embarrassing levels by bad monetary policy, he sees value in individual stocks. I have a certain amount of exposure to the US via my Sipp at Netwealth (it is passively run) but regular readers will know I have been (wrongly) worrying about the market being expensive for far too long.With that in mind, perhaps a long-term conviction portfolio of well-priced growth stocks is the insurance I need against persistent wrongness, particularly given that Hargreaves promises to produce a blog in which Yiu will be explaining all his purchases to investors. I'll be watching it.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.