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Will Covid-19 crisis change how investors assess a fund manager’s value?

1 June 2020

Could the Covid-19 crisis spark a shift in how we assess value? David Coombs, Fund Manager, Rathbone Multi-Asset Portfolio Funds, believes it already has and that good quality communication is key.

Silence is not always golden.

When it comes to weighing up the value on offer from a fund and its managers, an assessment of performance and price is par for the course, but the ongoing public lockdown has highlighted another, softer variable that we think should be considered – communication.

Informative, timely, and insightful comment can add huge value, and its power should not be underestimated, particularly so in times of crisis when the outlook appears challenging at best. This is something that has become increasingly clear to us as we settle into our ‘new normal’ of home offices and indulgent afternoon snacking.

There has been an influx of people wanting greater and better forms of communication to stay connected during this crisis. More than just fund factsheets and pages of reports, people are eager to make the most of the technology available to stay informed.

Really, there is little excuse for companies not to be using tools such as Zoom or Microsoft Teams to help stay in touch with investors – not even a lack of high-brow titles in their bookshelf backdrop – and now could well be a good time to take a step back and think about the quality of the interactions you have with those managing client cash.

Yes, the price may seem right, but are they communicating with you quickly and effectively? Are they explaining how they are navigating the crisis, and what the potential impact could be on your portfolio? Do they come to you with answers before you even realised you needed to ask the question?

Silence is not golden in times like these, and communication could well prove an effective measure on which you can judge the quality of a manager.

As managers of multi-asset funds, we are particularly aware that our funds can make up a large proportion, even all, of a client’s savings. With that comes a big responsibility to be transparent and available to our investors when the world tips upside down, arguably more so than a single strategy fund that is likely to be a component part of a portfolio and account for only a small percentage of a client’s savings.

Importantly, fund managers should be tuned in to the relevance of the information and updates they share with you. Now is not the time to become an armchair epidemiologist, nor is it the time for them to pretend to know what state the world will be in this time next year. It is the time for honesty and sticking to the facts in a language that is easy to understand. Underlying clients are unlikely to be overly interested in the likes of PMIs or yield curves. In the past many have made use of glittering studios and cameras but with everyone filming or recording from home, the playing field is now level and it is the quality of content that counts, not flashy production values.

No one size fits all, of course. Some will be happy with a quarterly report or simple performance update; others want one-to-one time on a video call and a blow-by-blow account of how the market slump affected their portfolio – a manager which is flexible enough to offer different levels of interaction depending on your needs is a keeper.

Proper communication is powerful. It builds trust and understanding, ensuring investors are well-placed to make informed decisions about their investments and help them form that value judgement the Financial Conduct Authority is so keen on. The quality of those interactions can often separate the wheat from the chaff when it comes to managers.

Managers should be going above and beyond in their attempts to communicate effectively, and we urge wariness of managers that bury their heads in the sand and are resistant to change. Once this crisis has passed, as it must surely do, it will be those managers who reached out and offered support that stand out for all right reasons. As we move forward perhaps communication will become one more metric on which clients can judge the success of a manager. This crisis could well prove to be a turning point.

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