THROWING DOWN THE GAUNTLET
Eish! Could my view of the collective investment industry be so different that I feel obliged to give my opinion on a related topic appearing in a letter and article in the same issue of Finweek?
In support of John Simpson’s view (Feedback, 28 March), I would like to take on Pieter Koekemoer of Coronation regarding his statement that the collective investment industry is completely transparent and I quote (Collective Insight supplement):
“Die kollektiewe beleggings industrie is heeltemal deursigtig. Die eerbewyse kan slegs uitgedeel word omdat alle fondse hulle prestasie rekords vir openbare ondersoek beskikbaar stel. Geen ander beleggingsopsie kan op ‘ n na-koste grondslag so maklik beoordeel word nie.”
Loosely translated as: “The collective investment industry is completely transparent. This praise can only be handed out because all funds make their performances publicly available. No other investment option can be analysed with such ease on an after cost basis.” In my view the only way to get to transparency is to publish the calculated industry returns and then to publish the real achieved returns on an entry-level investment at the institution and at a Linked Investment Provider (LISP). With a system like that, there will be nowhere to hide. I would like to challenge Mr Koekemoer to provide proof of their fund’s returns on an entry-level investment after all costs – preferably where they have invested own funds through the total cost chain – at a LISP or LISPS.
I’m prepared to issue the same challenge as John Simpson to Mr Koekemoer: prove your facts (before and after cost returns on actual investments over one, three and f ive years) and I will make a donation of R1 500 to any child’s education or school fund of your choice.
Investor & Financial Planner I have forwarded on your letter to Coronation for response but in the interim I have two comments. First, I think that you touch on an excellent point when you talk about an “entry-level ” investment; if an investor is comparing performance f igures, they should always be looking at whether the fees they are seeing refer to institutional or retail f igures as this will have a significant impact on performance in the long run. Institutions negotiate for better fees and retail investors should be prepared to drive a hard bargain as well.
My concern around your comment about comparing on a 1-, 3- and 5-year basis is that the difference in the overall investment performance will not be as obvious to a retail investor on such a short time span. Rather the investment should be considered over f ive or ten years as well as the length of time the fund has been in business.
We will await feedback from Coronation and will keep you posted.