The Investment Association’s members manage money for clients around the world “helping them to achieve their financial goals.” Had Daniel Godfrey considered this rubric more carefully, he might have wondered whose financial goals the association is helping to achieve. It seems he thought they were those of the clients, and so last week he became the association’s former CEO.

It’s only three months since it published a pompous statement of principles, starting with “always put our clients’ interests first and ahead of our own.” Perhaps Mr Godfrey really believed this, and felt it reasonable to suggest that the fees paid for taking care of clients’ money might be somewhat on the high side.Those fees certainly produce some handsome returns, although not to the clients. At M&G, for example, Richard Woolnough was paid £15m last year, while Martin Gilbert at Aberdeen Asset Management received £4.7m. These rewards do rather take the sting out of any criticism of pay in the companies whose shares the managers control.

Fund management has been a fine gravy train, with its bewildering and opaque charges. The Financial Conduct Authority’s Retail Distribution Review let daylight in on the true cost of the industry’s diligent caring, and fees are under pressure. Mr Godfrey welcomed the RDR for putting the clients’ interests first, and his paymasters didn’t much care for it. Before his swift departure, Schroders and M&G had decided to quit the association.

Encouraging a better balance of rewards between the owners of the money and its managers is not what this trade body is about. Had he restricted himself to pious platitudes about saving more (through their funds, natch), lobbying for tax breaks or moaning about compliance costs, Mr Godfrey would still be there. As his successor will find, this is really still the investment managers’ association..

Time to end this French farce

Banking’s biggest boondoggle took place last weekend in darkest Peru. The annual meetings of the World Bank and International Monetary Fund in Lima discuss such exciting topics as What’s next for the world economy? (we don’t know) and today’s hot fashion, infrastructure (we want more of it, and for someone else to pay).

More interesting is the political manoevring over the top jobs, as Christine Lagarde’s current term at the IMF expires in July. The original deal was for an American to head the bank, and a European to head the Fund. Over the years, the French have managed to snaffle this post, even parachuting Ms Lagarde in when her predecessor was caught with his trousers down.

Despite her many qualities, the IMF has not distinguished itself in the great euro drama and the botched bailouts of Greece. It’s had plenty of experience with economic rescues, but seemed reluctant to challenge the European Central Bank – perhaps it was all too close to home for the managing director.

Last week 31 (count ’em) of the international great and good wrote to the FT suggesting that the IMF scour the world, rather than just France, for her successor. Oddly enough, there were no French signatories on the list. Zut Alors!

Hard to improve on this

Buy shares in Melrose today, and the company will give you most of your money back.The latest iteration of chairman Jock Miller’s “buy, improve, sell” philosophy promises a payback of between £2bn and £2.5bn. Considering that the current market value of Melrose is £2.7bn, you’d be buying shares in a big company to end up with shares in a small company.

It’s not quite like that, of course. Mr Miller and his merry men follow the mantra strictly and successfully. This particular capital return follows the sale of a German metering manufacturer bought just three years ago. It’s hardly the sort of investment you’d expect to produce a 33 per cent internal rate of return,  and even by previous standards, it’s outstanding.

Calculating how well Melrose shareholders have done is complicated by these capital repayments, but Mr Miller now has a big fan base. He makes the payments, but don’t expect to keep the money – when the next suitable candidate for treatment appears, he may ask for it back again.

This is my FT column from Saturday. Fishing yesterday got in the way of earlier publication…

Two small sea trout, since you asked.

 

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