ARTICLE ORIGINALLY PUBLISHED 27TH OCTOBER 2017
Given time, most industries develop a jargon which allows participants to exude a professional glow and some degree of intellectual superiority when addressing outsiders (especially when poised to charge for their services). This is notably true of the financial services industry generally, and never more so than within fund management. Fund managers must communicate with their investors on a regular basis, not always at times of their choosing… which ideally would be on the odd occasion that things have gone well. As a consequence, it has been necessary to develop a language that appears to convey professional excellence, perspicacity and high value-added when the reality tends to the mediocre. Fund managers are world leaders in the deployment of euphemisms… by way of example, don’t expect to read “sorry, we had a bad month/quarter/year/decade/career”, expect “this is a momentum driven market” or “the rise of passive investing is distorting market behaviour” or “the political environment has proved unpredictable” or “we have rebalanced the portfolio” or “once rationality has been restored” or “our investment horizon is noticeably longer than the market’s”.
This is our First XV of fund managers’ euphemisms… and translations.
What they say |
What they mean |
|---|---|
| Forensic accounting is a core activity within our research process | Sometimes we even read the report and accounts; all of it |
| We remain absolutely committed to the integrity of our process | We’ve had a shocker; really sorry |
| We engage regularly with senior management of all our investments | The IR manager drops in occasionally and we do accept the Wimbledon invitations |
| Central banks remain blind to the inflationary pressures building | We’ve got way too much cash |
| The yield on this share means we can afford to be patient | If the dividend’s cut, we’re toast |
| Under MiFID II, research costs will now be absorbed by the firm, rather than the fund, aiding performance | Bang goes our bonus |
| This is a compelling investment proposition | If we sound like a hedge fund, could we charge a performance fee, please |
| On a risk-adjusted basis, the fund has performed well | We’ve underperformed – please can we change our benchmark |
| We believe the offer materially undervalues this business | We paid more, but another 5p on the bid and we’re out |
| Pushback has been negligible and many investors have expressed their support | We’ve seen chunky outflows already |
| Our size enables us to be flexible and nimble | We’re much too small; costs are killing us |
| Our size gives us unrivalled access to both corporates and the investment banks | We’re way too large to manage efficiently |
| Our turnover is low, with a strong belief in long-term investing | Some of our stocks were in the portfolio last year too |
| It isn’t our business to anticipate the ebbs and flows of volatile markets | We’ve no idea what’s going on |
| October was a pleasing month | Don’t look at January through September please |
