Bad news for fund managers; good news for investors
Fund managers’ pay is falling. That’s got to be good news for investors, says Merryn Somerset Webb.
One of the maddening things about the state of corporate Britain has long been the pay packets of our fund managers.
Daniel Godfrey and I spoke about this at length in our interview here. There are two key points. The first is that fund managers make too much because they charge too much: super pay can only come from super profits. And the second is that it is really hard for fund managers to make a fuss about how much the CEOs of big listed companies are paid when they are raking in many millions themselves.
So while we have long wanted the costs of investment to fall just for the sake of it (the less our investing costs the more wealth we are able to build for ourselves rather than our managers) we also want them to fall so that fund managers get paid less and find their houses less glass-like when they have a go at executive pay.
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So I bring you good news. Last year was the least profitable for the global asset management industry since the financial crisis, thanks to rising sales of cheap passive investments (sales have doubled in the UK in ten years), price competition, and a fall in the volume of their assets under management.
The result is that asset management employees' median pay, including bonuses, fell 17% last year (to £83,000), says the FT. Things were worse in the US, where senior and mid ranking employees saw their bonuses cut in half.
Bad news for those employees. But perhaps a reflection of some good news for investors?
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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.
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