Fuzzy Future for Fundies
I have been questioning the sustainability of the asset management gravy train for the best part of two decades. Fred Schwed was lamenting the lack of satisfactory outcomes for clients way back in 1940 when he wrote "Where are the Customers' Yachts?". A brief look at the BRW Rich List or the most profitable Australian companies suggests little has changed in 70 years. The big four banks have wonderfully profitable asset management businesses. Macquarie's highly successful transition from traditional investment bank to asset manager has been the main driver of its share price appreciation in recent years. And Magellan Financial Group has been one of the best performing stocks on the ASX over the past five years. You could argue, therefore, that it would be a brave man or woman to suggest that the wonderful economics of the industry are about to change. In this post, though, I am going to suggest exactly that. The risks to funds management businesses are mostly to the downside. (VIEW LINK)
Steve began Forager Funds in 2009, and now manages approximately $470m across two funds. Offering a listed Australian Shares Fund (FOR) and an unlisted International Shares Fund, Steve focuses on long-term investing in undervalued companies.