Articles of Interest October 2020
AMP fires AMP Capital to go passive with KiwiSaver, NZRT
Last week, Investment News reported on AMP's KiwiSaver overhaul. They have decided to replace "sister-firm" AMP Capital, the main current manager, with index titan BlackRock.
AMP is a default KiwiSaver provider, and the fourth largest in the space. While the well-established company offers a feeling of comfort for investors, the under-performance of their KiwiSaver funds has persisted for some time.
While the move was surprising for us, we see it as a win for KiwiSaver investors. AMP is not only moving away from active to a more efficient passive strategy, the change also moves away from the vertically integrated structure, where products and advice come from the same source.
David Booth discusses investing and elections for the NYT
With the US election nearing it's conclusion, investors are again questioning the potential impacts for their portfolios. In this New York Times article, Dimensional's David Booth offers some insight into how markets work.
Things are rarely simple in the stock market, with many companies supported by Trump's presidency tumbling throughout the year. Others which should have been hindered have seen their share prices soar.
This all supports the idea that betting on election outcomes should not be part of a long-term investment strategy.
Report shows short half-life for big fund brands in decade of change
This article opens with "Almost half of the top 500 global fund manager brands have disappeared over the last decade". This is all consistent with the overwhelming evidence that actively managed strategies don't stick around.
While some managers go under, many are bought out and merge with other brands. While this report covers the largest global managers, the trend applies also in NZ. For example, looking at MJW's popular investment surveys, the names in their September release have changed considerably from those in the 2009 survey.
The trouble with this pattern of change is the difficulty in assessing past performance. After all, when we look through the managers, we aren't seeing the performance of those funds merged or disestablished. Seeing the scope of this change globally raises questions about whether the future best performing funds will just be the last ones standing.