‘You say it best, when you say nothing at all…’ So sang Ronan Keating in his 1999 chart-topping hit of roughly the same name – the idea was that the singer’s beau could make her love known through non-verbal communication.
Some fund managers also seem to think this same logic applies to communicating with their investors. When marketers ask these types of managers to communicate on a given topic, the answer may well be one of the following:
“I’m too busy”
“I have a day job to do”
“My performance isn’t great so I don’t want to say anything”
“My performance is great so I don’t need to say anything”
Or, just simply:
All of which might be fair excuses, but the one that gets trotted most often is also the most bizarre argument for not communicating:
“I don’t want to say anything about that stock I do/don’t hold, as I might be wrong and someone will tell me in 6 months that I was.”
This is counterintuitive on a number of levels. First, fund managers are paid the big bucks to have a view on a company which fits the criteria for their investment portfolio. It is, by definition, their job.
Second, this is what the retail investor wants to hear about. Not so they can go out and buy the company for themselves (and so what if they do?) but so they can better understand the investment skills of the manager and assess whether or not their view of the world accords with their own. Go to any investment trust AGM and you will see the eyes of the audience light up when the manager gives examples of stocks in the portfolio.
Retail investors also want to know what’s going on with their money – arguably they have a right to know, and fund managers have a duty of care to tell them. Not just about the winners and when things are going well, but when times are hard too. In fact, this is doubly important. Nobody wants to wake up one morning to discover their investment is in a large percentage of illiquid unlisted companies that keep going pop, especially if that’s not what they thought they were buying at the outset.
Similarly, if an investment case for a company turns sour, or a mistake was made, or a company decides to shut up shop, then these are all good reasons to communicate with your customers. Ok, it might appear like it’s bad news, but better that there’s no surprises and at least the fund manager can be on the front foot explaining what they are doing about the situation.
There’s also a very good technical reason to have a public view on companies in the portfolio (or those that aren’t and why they aren’t) – if that view is on a webpage somewhere then Google can find it and return it in a search result. Done well, that means the manager’s view on XYZ Plc will be generating web traffic to the website of their investment. What you might call a win-win.
The final reason to say something, not nothing, is the fact that, whether you like it or not, fund managers already are. By buying, holding, not holding or selling a stock, you are already telling the end investor that you have a view on that company. You bought it because you believe its shares will increase in value over time. You hold it because you think there is further to go. And you sold it because you think there isn’t. Why not add some colour to that and explain why?
In this age of hyper-communication, is saying nothing at all really an option, Ronan?
Author, Simon Longfellow, is an expert in investment marketing with over 25 years of experience working within the financial services industry. He is the Independent Director of Electric & General Investment Fund, and a non-executive Director of Columbia Threadneedle Global Managed Portfolio Trust – an investment trust investing in other investment trusts to provide shareholders with either growth or a regular income.