EDITOR'S LETTERMerryn Somerset Webb
A golden age for investors
This week’s magazine contains all the usual misery. There’s the dismal state of British politics, the amount of money Tony Blair is making out of being our ex-PM, and the fear about how drones might be spying on you (and how to make money out of it).
But I have good news too. I think we are about to enter a golden age for investors. I don’t say that because stockmarkets are cheap and we’ll all be rich in a couple of years (it probably isn’t so, and for Bill’s take on the matter, see here). I say it because I think the financial industry is on the edge of quite significant change.
I went this week to the National Association of Pension Funds conference (I do this kind of thing purely so you don’t have to). There I listened to James Wales, one of the co-founders of Wikipedia. He pointed out just how quickly technological change can knock over confident incumbents. The Encyclopedia Britannica and its German equivalent, Brockhaus, weren’t taken out over a generation by Wikipedia – they were irrelevant within “less than ten years”. Ask a teenager today what an encyclopedia is, and they’ll answer: “is it a bit like Wikipedia?”
This is a story our big fund managers should consider, because turbo-charged change is coming for them too. The threats to their businesses are many. There is the fast-falling price of passive investment: this week iShares slashed the price on its flagship FTSE 100 tracker from 0.4% to 0.07%. That’s proper cheap. There is the rise of smart beta (simple strategy-specific funds run by robots). There are the new non-conventional rivals – what Americans call robo-advisers – such as Nutmeg in the UK, and new-launch funds (such as the Patient Capital Trust we covered last week), experimenting with novel charging methods.
But most importantly there is the desire for, and easy access to, financial data.
• Read the full editor’s letter here: A golden age for investors