Bedlam Asset Management, a new entrant into the UK asset management industry, is promising to re-int...
Bedlam Asset Management, a new entrant into the UK asset management industry, is promising to re-introduce old-style management ideas that will give investors a better deal when it comes to managing their money.
Bedlam's chairman Jonathan Compton says the goals are simple: more transparency, better pricing and a shift away from comparative performance to absolute performance.
"The key is we are inventing nothing. We are just trying to get people a return that is about two to four times what they would get from a bank account with a good rate of interest."
"We are offering a no gain no fee approach, although it is important for people to understand there are risks there too. But our big difference is that investors can see what they are invested in within 72 hours, rather than waiting for semi-annual statements or other paperwork."
Bedlam is aiming to do business with fee-based IFAs and institutions.
The company will not pay trail commission, and Compton says he believes such commissions will be abolished within the next three to four years.
The investment style will use a "trade-buyer" approach and focus on fundamentals of the 20-40 stocks in the typical portfolio although the macro-economic picture will not be completely ignored.
A trade-buyer approach means that when a stock falls to a share price level whereby an acquisition would become self-financing, it is definitely worth looking on as a stock to bring into the portfolio.
Compton says an example would be if BP fell another 50p-60p: although it is unlikely to be acquired, the price would make any acquisition self-funding and a good buy signal for Bedlam.
By the same token Bedlam is not going to buy any bank stocks in the next six to nine months because Compton feels the markets have underestimated the effects of the cyclical downturn on banks and that their share prices are still too high.
In terms of market impact, Bedlam is pinning its hopes on turning up the heat on asset management houses that keep drawing hefty fees despite poor performance.
Compton is particularly scathing about the use of "guaranteed" returns in advertising.
Anybody can buy guaranteed returns by buying gilts, but guarantees that rely on hoped for appreciation in index levels is not something that can be supported - and this is exactly what Compton says he has found by studying the prospectuses of some of the offers around.
Investors should "test" the guarantees they see on posters, he says, as some of them "remind me of the promises made by split caps that said you could sleep well at night".
"You know there's been a lot of talk about corporate governance. I believe that it starts with fund management companies. Investors should have the right to see balance sheets and suchlike.
Posters promoting Bedlam are due to hit mainline train stations in the next few days along with Underground advertising and sandwich-board men already pounding the pavements.
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