Crispin Murray was mostly in good form at last month’s launch of Standard & Poors’ ‘Active Vs Passive Scorecard’ to the Australian market. The Scorecard showed two-thirds of Australia’s active Australian equities managers had underperformed the S&P/ASX 200 in the five years to June 2009, but the guy who runs the asset class for BT Investment Management pointed out the comparison was a little unfair.
“You’re comparing us here with a fee-free benchmark…I think once you adjust for the price of indexing, the average manager ends up washing their face,” Murray said, speaking in a debate with Roger McIntosh of Vanguard. Acknowledging there were still a lot of mediocre performers, Murray said it could be distribution conflicts of interest keeping poor funds alive, or perhaps an unwillingness to crystallise capital gains liabilities.
He also fingered asset consultants for “liking to see lots of smaller funds, and encouraging breakaway boutiques because that creates fee pressure”. As funds management was a low capital intensive business, experienced practitioners had been tempted to start boutiques “almost as a semi-retirement move”. Perhaps Murray said this a little too wistfully, as a few of the assembled research analysts tittered nervously, no doubt remembering the entire BTIM float was largely about retaining Crispin. “That comment will come back to haunt me, won’t it?” the man smiled. If being written up on page 46 of Investment & Technology counts, we guess it has.