Active Fees for Passive Returns – How Did it Come to This?

In the 1990s, Colonial First State fund manager Greg Perry established himself as an industry doyen. Between 1990 and 2002, the flagship Imputation fund outperformed the market by 11.8% p.a. Together with CEO Chris Cuffe, the duo oversaw a highly successful period, with FUM growing from $150 million to $100 billion, including $25 billion in Australian equities. Fund managers such as Perry, Peter Morgan, and the late Robert Maple-Brown all significantly outperformed the market for well over a decade. But the industry changed soon after the turn of the century. The pool of talented Australian fund managers seemingly dried up. The new incentive – don't underperform and you keep your funds. During the last decade, many returns hugged the index. Combined with high fees, underperformance resulted. How did it come to this? We examine the role of banks, modern portfolio theory and gatekeepers (asset consultants). Read full blogpost: (VIEW LINK)