News
FOCUS - Spring 2003
Performance in a Changing Climate
Industry comment by Charles Payne, Executive Director, Fidelity
Performance measurement departments face a very real challenge. We see better than anyone the impact that falling markets are having on our business. But what can we do to help? We've all argued over the past decade that Performance Measurement is a critical function within asset management. But if we really believe that this is true, now is the time when we have to demonstrate our value and prove that we really can make a significant contribution to the competitive health of our organisations. Here are some thoughts on areas where we can make a difference:
Fixed Income - the share of resource deployed by the average performance team on fixed income products will typically be less than 10%. Yet now is the time for bond investment teams to come into their own, as funds make significant increases to their bond weightings. Does your attribution system handle bonds in a professional way? Fixed income is about three things: process, process and process. Without your help, how can your marketeers convince the consultants that your process is understandable, delivers what it is meant to, and is repeatable?
Marketing Support - businesses do three things: they make something, they sell it, and then they look after clients that have already bought it. Traditionally performance departments devote most of their resources into the third of these activities, via regular institutional and retail reporting. Do you have a dedicated marketing support team to make sure you get the numbers that show your business off to best advantage into your RFPs and retail presentations? Do you analyse and spot emerging new retail funds that might be candidates for your retail sales team's 'hot list'?
AIMR/GIPS fees - for a complicated firm, you can expect your AIMR/GIPS audit fees to approach GBP100k. How can you recover this outlay? If you become UKIPS compliant, this may well give you the freedom to revisit the amount paid for external NAPF performance verification with the view to partially offsetting the audit fees.
Managing the Managers - you have the numbers within your control. But what do they all mean? Do you turn the data you have into meaningful management information about your managers and the funds they run? Get this right and you will be able to help:
- your managers understand the impact of their investment decisions, and help them continue to make the right ones
- your CIOs to run more effective management meetings - with full data on a fund's style, risk profile and stock successes and failures
- your sales team to position any fund effectively against its competitors by comparing its profile against those in the relevant peer group
Times are hard, and we have limited resources. However now is the time, more than ever before, when we need to make sure that the resources at our disposal are deployed to the best advantage of our firms. This is our most important battle yet, and your staff need you to be their general!