The best of times, the worst of times and somewhere in between
Good morning all! Marvellous mid-week missives from Mills! It’s a busy old week this week, I can tell you. Running from meeting to meeting, trying to remember which topic I’m supposed to be talking about, quickly snapping some “Where was I?” pictures (my new LinkedIn game!) and all whilst maintaining an air of professional consulting. At home, in contrast, I had that wonderful conversation with my sons who were asking, for only the 3rd time this year, what it is I actually do for a living. “Sell people”, “eat breakfasts”, “get fired” were the closest and I really can’t repeat any of the others in a semi-professional forum, sorry.
A third, a third, a third: up, down and rocky.
My recent conversations are very diverse. A third are bemoaning cost cutting, job losses and disappearing budgets & firms, for that matter. A third are bullishly innovating in digital assets and AI (whilst also predicting the end of the market as we know it!) And the middle third are heads-down, working their arses off, trying to maintain the best of what they’ve got for as long as they can. It’s not easy out there, I know.
Just because nobody complains, doesn't mean all parachutes are perfect - Benny Hill
The FT mirrors those views. We have ￡67bn of UK investors’ money in underperforming funds with e.g. St James’s Place Global Quality underperforming its benchmark by 26% over 3 years, closely followed by its Sustainable and Responsible equity fund underperforming by 24%. This is one clear area where my definition of Quality and Responsible diverges from St JP’s. The full report is a sobering read from Bestinvest, and demonstrates the need to improve our overall industry performance – this level of consistent underperformance should not be allowed to persist, and I’m all for the ‘red in tooth and claw’ to filter out the worst.
Actually, whilst I’m here, can anyone please tell me, when firms embark on ‘cost-cutting programmes’, why do they never prune the front office as aggressively as they scythe through the tech/ops teams? I know most of the answers, but with all these dog funds hanging around, and the undoubted ability to get fund managers to run more funds per head, I’m confident that you’ll recoup your shrinking margins much more quickly by ‘rationalising’ the far-more-costly front office. Time to make the hard decisions, not the short-term easy ones.
On the bullish side, innovations are turbo-charging the crypto ETF industry with the $57bn iShares Bitcoin Trust rapidly closing in on the $80bn SPDR Gold Shares as the planet’s largest commodity exchange traded product. As the CIO of Bitwise AM rightly says “to date, crypto has mostly been a retail phenomenon…as crypto is normalised, more and more professional investors are going to come into the space.” I agree with him when he predicts that “it’s going to be normal to allocate 2-5% to crypto”.
There is no great harm than that of time wasted – Michelangelo (as quoted in the UK T+1 report!) ?
In my world, I’m preparing for another barnstorming Citisoft Breakfast tomorrow. We’re focused on the world of ‘automating tech and ops’ especially in light of the latest UK T+1 announcements. 11th October 2027 is the date: T-960 days and counting! We’ll be covering the proven, the pragmatic, the perky and dodging the prosaic as much as possible. Without fail, every Breakfast throws up at least 3 incredibly useful insights you’ve never heard of before…constantly learning, you can’t beat it! I might even showcase my AI dabbling, starting with a simple range of articles (or thought-pieces, if I was being grandiose) currently ordered as ‘challenging’, ‘optimistic’ and ‘funny’ (and yes, they definitely made me laugh: “AI trading bot mistakes cat walking across keyboard for market analysis, makes fortune”.) That’s the easy PoC, I’ve got 3 even better ones in my pocket where that came from…
As always, have fun out there!
Audere est facere.