Communication is a major problem in the fund management industry. Whilst financial markets exist in a state of constant uncertainty and flux, asset managers talk with unwavering confidence. Their utterances are driven by the sales imperative and a general reticence to admit mistakes. They therefore often require some unraveling to get to the true meaning:
Below are some favourites (with translations provided):
“ESG is in our DNA”
“We have always done some company management meetings, but have started to take environmental and social factors seriously now we can see it sells”.
“What we have witnessed is a 10 standard deviation event”
“This didn’t show up in our backtest”
“We don’t have a specific capacity limit in mind for this fund, but we can say that our current asset size has had no impact on our investment process”
“You must be mad if you think we are going to close down this revenue stream”.
“Private equity and ESG are a natural fit”
“We hope you haven’t noticed that the private equity model has largely been built on shareholder value creation at the expense of other stakeholders”
“We are benchmark aware not benchmark constrained”
“We are benchmark constrained”.
“The rise of passive investing and quantitative easing has materially distorted how markets function”
“Performance hasn’t been great”.
“The performance fee structure means that my interests are perfectly aligned with my clients”
“If I can just have one or two good years then I am made”.
“Active management will prove its worth in the next bear market”
“I wonder if I can appeal to your loss averse tendencies”
“Cognitive diversity is incredibly important to us”
“We have one woman on the team”.
“I am genuinely excited to join this company, with the resources they have and the freedom they give fund managers, it is a great place to run money”
“They offered me a share of revenues”