19th April 2012
A number of people have complimented me on my writing recently - it's nice to be appreciated.
Michael asked me if my creativity had received a boost due to my location. He asked me whether being surrounded by snow and therefore not receiving any visual stimulus had anything to do with the sharpness of my memory of events long past.
Let me just say that my surroundings are so beautiful it makes my heart bleed.
Creativity is boosted by beauty as evidenced by the places a lot of the greatest artists have lived. The most successful design centres are also located in places of natural beauty such as the great Italian carrozeria (car design studios).
Writing for financial institutions over the last few years has, in the most part, been a chore. It was a job for which I received a salary.
My overwhelming memory of working in London is one of darkness. I find London to be dark and sinister and my work was not as creative as I would have wished.
I didn't enjoy it all of the time at Liverpool Victoria Asset Managers and while Shaun, my creative head of marketing, praised me and stood up for me, most of the investment managers were usually less than complimentary. I think this was due to a combination of my writing how it was and a case of the managers being protective of their babies, their investment portfolios.
It was also because I didn't know what they were talking about and they had rumbled me.
The writing was for marketing purposes but you do not lie when returns lag the benchmark. The purpose of an investment report is to inform investors how their investment is performing while also persuading them to leave their money with us so that we can continue to earn our fee.
Investment managers take your money and invest it in company shares, hopefully benefiting our investors when these companies do well and their share prices go up. The investment companies; asset managers running pensions, investment funds and high net-worth individuals' money, continue earning their fee whether the investment fund creates a positive or negative return. Imagine being told that your investment lost 20% in the last six months and while you are reeling from this news, we deduct our fee. For what? For looking after your hard earned money and losing a fifth of it.
I was working at Schroders, one of the oldest and most successful asset managers in the UK when we got into trouble with the press for our complacency. In one of our monthly or quarterly investment reports, I can't remember which, we stated that the fund had beaten its benchmark by something like 1.53% in very difficult market conditions. We failed to mention, however, that the benchmark had fallen by 16% and therefore the fund had actually lost more than 14% in value over the course of the reporting period.
The funds being managed by Schroders are some of the biggest in the UK but are truly peanuts compared to the funds I was helping to write about at Capital International, part of the Capital Group. A single one of their funds was around US$100billion.
In terms of assets under management, the top three places in the world were usually taken up by Fidelity, Vanguard and Capital. Unlike the other two companies, Capital is privately held and therefore not as much of a household name. The funds it manages are however and most Americans have at least part of their pension tied up in one or other of Capital's American Funds.
As at the end of 2009, Schroders managed US$234billion and ranked 68th in the world*. Capital, one-time regular top-three place holder with assets of around US$1.6trillion, languished down in 10th after its assets lost value leaving it with around US$1.2trillion*. A merger between Black Rock and Barclay Global Investors has meant that the largest asset manager in the world at US$3.3trillion is 75% larger than the second ranked manager*. This amount is equivalent to around twice the wealth produced by all the companies working in the UK over the course of one year.
At this time, the total assets under management of the top 500 managers came to over US$62trillion, 40% held by the top 20 managers*. The total Gross Domestic Product (GDP) of the world is US$63trillion. That is all the money earned by every working person in the whole world in one year. Putting that into perspective; this is equivalent to giving US$9,000 to every living person in the world. All seven billion of them including all children, unemployed, homeless, retired and starving person.
This money does not belong to these companies, they are just looking after it for other people and charging a fee for doing so.
Apart from some percentages and decimal points and reports, these companies do not produce anything. They do produce a lot of reports though. At one time, and this may still be the case, Capital Group was the largest publisher in the world due to the large number of people who received their regular investment reports.
I felt proud to be part of it, it was a great place to work but at the same time, the whole world of investments and banking was collapsing and it all seemed a tad dishonest. There will always be a place for this kind of work, but I doubt the managers deserve to be paid the large amounts of money most of them receive. There are lots of clever people in the world doing as much if not more work than these guys who earn a lot less.
If money is your thing, then good on you. If you want to work long hours so that you can live in luxury and enjoy yourself for two or three weeks a year when you go on holiday, then carry on.
I, on the other hand, while a great appreciator of beauty and creativity, am happy with a meager living and would prefer to enjoy myself all of the time.
*Reference
No comments:
Post a Comment