Fidelity - the Tory "Fund" managers

Hat tip to Labour and Capital blogger Tom P for highlighting how fund managers Fidelity are one of the biggest corporate donors to the Conservative Party. I wonder how many Fidelity policy holders or members of the local government pension scheme (Fidelity Worldwide Investment runs £3 billion of LGPS money) realise that profits from managing their pensions is going to fund David Cameron and George Osbourne?

Check out Tom here at "Another £25,000 donated in April" and "On the trail of a big Tory donor"  (see below)

"Readers of long standing may know that I've blogged a fair bit in the past about the financial and political relationship between asset manager Fidelity and the Conservative Party. On the Peter Cruddas scale, Fidelity are a "Premier League" donor. For example, they gave the Tories £300,000 in the year running up to the 2010 general election. Last year they gave them £100,000. They also employ the MP Srir John Stanley as a consultant. (They also chucked £50,000 at the No2AV campaign in 2011).

Oddly, over the years the way that Fidelity donates to the Tories seems to have changed. So up to 2008 they were listed as "Fidelity Investment Management" with the company reg number 2349713 or sometimes 02349713.

But from 2008 to the start of 2012 they started appearing as "FIL Investment Management", again using the same company reg number. Then, for the remainder of 2012 (three donations of £25,000), they appeared as "FIL Holdings", using the company registration number 6737476.

Since the start of 2013, however, there have been no donations have been reported using any of the previously used names or company registration numbers. Maybe they've stopped, or maybe they are reporting under a different name and company registration number? Or maybe they just didn't donate in Q1? Anyway, I'm keeping an eye on it".

Keep up the good work Tom. Of course, you do wonder why the very highly paid directors of Fidelity choose to give all this money to the "tax cuts for millionaires" Party? 

Fund managers index of shame

Fair Pensions have issued their latest rankings of "ethical" fund managers.

Which to be absolutely frank is deeply disturbing. Especially since many fund managers who claim to be ethical would be appearing to act in a completely irresponsible and unresponsive manner?

How on earth can only 11% of fund managers screen out child labour? Does that mean that the other 89% think its a good idea kids don't go to school and spend their formative years in sweat shops?

Why  do so called ethical fund managers refuse to respond to such surveys? What on earth do they have to hide?

What is going on? 2/3 of funds that claim to to ethical do not even engage with the companies they own?

Some of fund managers who performed badly (to be polite) are employed by pension funds that I am a trustee on. I will look forward to some interesting conversations in the future with them on this subject. 

Rant alert! Fund Managers vs Unions

Great rant from the bearded one at Labour & Capital blog - Enjoy!

"A few years ago, when I was still working at Congress House, I had a lunch (not an expensive one I should add) with a fund manager. I actually quite enjoyed talking with someone with a very different perspective on some of the things that I bang on about. But one topic of conversation really grated, and it has stuck with me to this day - BA.

What irritated me was the fund manager's assertion that BA was overmanned and its staff overpaid. It's an assertion that gets repeated by asset managers in a lot of the coverage of the current strike. Now I don't pretent to know the ins and outs of the airline industry, or how BA compares to other airlines. But I am sure that BA staff deliver a real, tangible service. The contrast with fund management could not be more obvious. Good, I'm glad you agree. But let's to be clear on a few specifics.

If you remove BA staff, the airline will not operate, the planes won't fly and no-one will serve you a delicious (sick) in-flight meal. In fund management, you could just use a computer programme and get broadly the same result, this is after all the index-tracking business in a nutshell. Secondly, the service that BA customers receive is provided by the BA staff. The pilots fly you, the ground crew make sure the plane can fly, the cabin crew look after you during the flight. In fund management the service - the returns - is ultimately provided by someone else, the people working in the companies whose shares you hold via the manager.

It never ceases to amaze me how people seem to have this implicit view that fund managers generate returns. Actually what they do is select coupons (they don't invest money 'in' companies), and week in week out many of them are paid very highly for doing this worse than a computer programme could.

This shouldn't surprise us either. Effectively employing fund managers is like paying someone to go on Deal Or No Deal and choose the boxes for you. The future is as unknowable as the contents of Noel's boxes, and the historic results of active asset managers demonstrate this rather well. Pension funds and other asset owners might - as Paul Woolley suggests - be better off doing it all themselves, as they used to for much lower costs.

I'm sure a lot of people won't sympathise with the BA strikers, I do. But at least next time you read some fund manager telling you that BA needs to cut its costs remember that part of your pension is being needlessly shovelled their wallet. People need airlines to undertake air travel, professional fund management on the other hand is arguably an entirely unnecessary industry.

May Day Good News - Co-op applies to takes on Fund Managers

I wasn’t able to go to today’s trade union May Day march in London but instead I will post some good Labour movement news. I heard this week that the Asset management arm of the Co-op has applied to the Financial Services Authority (FSA) to be external fund managers.

At the moment the Co-op has its own in-house team of managers to run its successful range of mostly ethical investment funds. But they only manage in-house Co-op funds. Now the Co-op has decided to apply for permission from the FSA to make tenders as fund managers to all Pensions, insurance and Charity funds. I cannot find any Internet link but I am assured by a reliable source that this is happening and it is public.

This is really good news. While I am sure that the Co-op is not perfect its mutual values in equity investments has proved itself yet again in the current financial crisis.

There are many good banking and private fund managers but also too many rogues who frankly just rip off pension funds in return for rotten performance. Having a major player in the market place that is successful and ethical will drive up standards across the whole industry.

I would also imagine that the prospect of having the Co-op as Fund managers will be very attractive to many fund trustees. I am sure of course that scheme financial advisers will "welcome" the entry of the Co-op and I will be interested to see who (assuming that the FSA gives permission to the Co-op to become external fund managers) shortlists them to a beauty parade for a new investment mandate (or not).