The active asset management industry is overpopulated and hugely competitive, and, as with any sales activity, delivering the ‘appropriate’ message to prospective and incumbent clients is hugely important.  They are a range of common utterances from active fund managers, which feel as if they are intended to cultivate a certain image or manage client concerns, rather than present a realistic assessment of crucial issues. The types of statements listed below should be disregarded, or at least considered with a liberal dose of scepticism:

“ESG factors have always been at the heart of our investment process”.

“The growth in assets under management has not had a negative impact on our investment approach”

“We have reviewed strategy capacity and increased it by £1bn from our previous estimate”

“There is a bubble in passive strategies”

“Markets are not rewarding fundamental analysis”

“My (asset class / style / factor) is historically cheap”

“My performance has been driven by individual company selection, with no major impact from factor exposures”.

“We rarely use sell-side research”

“Even though half of the team have left to join a new firm we can continue to run an unaltered investment process”

“I spend 95% of my time at my desk on pure investment work”

“My CIO has given me their full support despite the difficult period of performance”

“The merger / acquisition / restructure has not been a distraction”.

“I think that interest rates are going to…”

“The performance fee structure means that we are perfectly aligned with our clients”

“We have an approach that can adapt to different market conditions”

“Having a team of 27 doesn’t hinder our decision making”

“All of our excess returns are from credit selection, being overweight credit risk hasn’t really been a factor”.

“I don’t think we suffer from any biases in our recruitment policy, it just so happens that the best candidates all went to the same universities and look the same”.

Although this post is somewhat tongue-in-cheek, there is an important point at its heart. If all firms and teams present themselves with a similar sheen, then there is a significant cost to being an outlier that is frank about problems, challenges and limitations.  This fosters an environment where openness and transparency are viewed as business risks.