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One Podcast to Start: Vanguard has become the money manager of the great power thanks to founder Jack Bogle’s commitment to philosophy. Now, along with the new CEO, can the company push into other areas of financial services and restructure them? In this podcast, Brookmasters, the US managing editor of FT, explains how the company’s guide mantra can help or interfere with these plans.
In today’s newsletter:
Investors have more options, but are new offers good?
UK Top Pension Funds Deal £28 billion from State Street via ESG Retreat
Currency investors are wary of betting on Trump’s tariffs
The industry wants to get back money
Philip Cogan, a financial journalist and author of More: 10,000 World Economy, interviewed Jeff Vinnik in 1995 and recalls that he has since run Fidelity Magellan, the world’s largest mutual fund. He slipped that the fund added $1 billion in value that morning. Good news for Fidelity fee income.
In this FT Money Cover Story, Philip tracks the evolution of the investment management industry over the past 30 years. Thirty years ago, investment management was primarily a boutique business, and fund managers politely agreed to hand over their clients wisdom in return for their annual fees.
These were great days for the Star Manager. At the time, many fund management groups were able to live a decent life, but they didn’t dominate the market. In fact, this was not too far from the fact that the performance was not random. This worked courtesy of the manager. Because they always have some funds that outperform the market. These could attract optimistic clients who want past performance to be a guide to the future despite regulatory disclaimers.
But everything changed. Over the past 30 years, the asset management industry has undergone a revolution. The sector, which takes pride in its expertise, has become the product business. Inevitably, fund managers are trying to adapt to this revolution by introducing new products. But while these innovations may seem like a great opportunity for investors, they may turn out to be traps.
Don’t miss out on Philip’s features and he explores how the industry offers many new options to seduce investors.
He concludes that while some may appeal to investors looking to diversify their portfolios, it should never be far from the hearts of such investors. It’s not clear that higher returns are available, but higher prices are.
do you agree? Email me: harriet.agnew@ft.com
UK Top Pension Fund Mandate Changes Hands
Tensions have risen between long-term investors and US asset managers, downgrading so-called environmental, social and governance investments following the election of Donald Trump.
Last week, a well-known example of asset owners opposed the shift revealed that People’s Pension, one of the UK’s largest pension funds, had subtracted £28 billion from State Street. After reviewing responsible investment policy, the pension plan decided to pass £20 billion of developed market capital mandate to Amundi and £8 billion of fixed income assets to Invesco.
The scheme, one of the UK’s largest multi-employer definition contribution schemes, said the companies will operate the funds “with a focus on responsible investment.”
“By choosing Amundi and Invesco, I chose to prioritize sustainability, positive stewardship and long-term value creation,” said Mark Condron, chairman of the Pension Council for Peoples, whose purpose is to “balance responsible investment principles with strong financial performance.”
“A major theme has been the increased differences in positioning between the US and European asset managers. Dan Mickleskis, Chief Investment Officer of People’s Partnerships, who run People’s Pensions, said:
This month, the Responsible Investment Campaign Group shared its reputation with BlackRock, Fidelity Investments and Vanguard criticised State Street. Asset Managers work with Asset Managers as an asset manager who overall supported only 7% of ESG shareholder resolutions last year.
The obligation switch this month, as a group of 26 financial institutions and pension funds, called on asset managers to be more proactive in engaging with companies investing in climate risk.
Several US pension funds, including California’s civil servant retirement system and California’s teacher retirement system, have also warned against dilution in climate reporting standards.
This week’s chart
The currency markets are increasingly denies the threat of Donald Trump’s tariffs, raising the risk of a major shaking as the US president follows his promise to strike China, Canada and Mexico with taxes this week.
Trump’s proposal to bring taxes on the EU and China on Thursday made the euro and currencies of other US trading partners, writing Ian Smith, Harriet Kralfeld and George Steer. But the fall was less dramatic than some of the turbulent times seen in the recent weeks when he began spelling out his plans.
Measures of expected short-term volatility in currencies such as the euro and Mexican pesos have declined since taking office in January.
“As the tariff trade has already been burned in tariff trade this year, investors have not responded much to unsupported tweets and political rhetoric,” said Jerry Minie, co-head of G10 forex trading at Barclays.
Exchange rates are being eased by tariff headlines, and have been heavily strengthened against the currencies of major trading partners on February 3 after Trump announced tariffs on Mexico, Canada and China. But the movement was reversed by the end of the trading day after the president postponed the introduction of taxation on the first two countries.
Since then, market movement has been sluggish in response to his announcement. Falling after broadside on Thursday, the euro has been stable against the dollar on Friday, far above the low of under $1.02 in early February.
Akshaysingal, the global head of short-term interest rate trading at Citigroup, said the currency market “want to make them work” after the tariffs “trust and believe” came.
He added: The announcement and postponement of tariffs on Mexico and Canada has shaken up investors’ trust that the tariff headlines are reliable, Singal said.
This week’s 5 unacceptable stories
The Securities and Exchange Commission raised concerns about how funds trading on new private credit exchanges from State Street and Apollo, which began trading Thursday, will maintain liquidity and valuable private debt.
The world’s top hedge funds have opposed plans by global regulators to limit borrowing use, saying investors have been miscried for recent financial market wobble.
Daniel Sundheim’s $21 billion hedge fund manager D1 Capital Partners has made a comeback by riding a handful of giant corporate turnarounds in Europe as the region’s stock market underestimates many of its large companies.
Macrohedge fund opportunities have been the best for many years, writes Kennestropin, founder and chairman of Graham Capital Management. More unstable markets are set to provide interesting terms for traders.
Jupiter suffered a net spill of £10.3 billion last year after one of the UK’s top stock pickers remained. . . Meanwhile, the UK’s largest retail wealth manager, St. James’ location has returned to profits against the backdrop of strong customer influx.
And finally
Claude Monet’s “La Debacle” (or “The Seine’s Ice Divine”) (1880-81) © Oskar Reinhart Collection
Swiss merchant Oscar Reinhardt began to seriously build his art collection, starting from Wintertour, a small town north of Zurich, to buy cherry picks from dealers in Paris and Berlin. Samuel Courtauld began collecting the same year. Goya’s special charm to Impressionism: The masterpieces of the Oskar Reinhart Collection exhibition lead to a photo in which Reinhart’s collection recursively repeats Courtauld’s collection, and Courtauld’s acquisition of the National Gallery in London, writing FT’s chief visual arts critic Jackie Wullschläger. The exhibition, including works by Cezanne, Manet and Goya, is a collection of 20 of 20 works visited from Am Lemerz at the Villa Museum in Wintertour.
February 14th – May 26th, Courtauld.ac.uk
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