Ann: Funds Under Management - October 2021, page-115

The risk here is that with extended underperformance (give it another year and a half) its very likely that the fund with suffer serious outflows.

Hamish can talk about the five and ten year horizons until he's blue in the face, but if you underperform a stock market index by 20% as an active manager with 1%+ fees and don't come back strongly within a few years, you've f*ed the entire performance of the fund for a decade. To overcome this level of underperformance + fees it essentially requires outperformance of 2-3%+ for the next decade. Is this realistic?

I am certainly in part salty as a result of the comments on Bitcoin as an example where I feel Hamish doesn't care/doesn't understand and equates that to the product being a scam. I don't think for an active manager that is tasked with looking for opportunity beyond that of a basic index that discrediting high growth aspects of the tech sector is a recipe for success. But truly, you can't look past the results. In the past Hamish consistently outperformed by a few percent which in my opinion is worth the price of fees and a terrific achievement, but a decade of that work has been wiped here.

People continue to talk about a defensive approach taken by Hamish, yet one of the most widely discussed amateur errors in investment is dialling back exposure to upside potential in times of uncertainty as you'll be left behind in a market recovery. This is exactly what occurred during 2020, its often a make or break for funds as if one is overly defensive during a market recovery you've effectively permanently lost that upside potential. Parts of 2020 gave among the highest levels of opportunity in a decade for capital allocation and not only did MFG not capitalise, they outright failed.

Defensive? They took all of the downside and none of the upside after a catastrophic event like COVID 19.

You absolutely CAN NOT look past a 20% underperformance and say better luck next time. As an active fund charging high fees you undeniably need to show consistent outperformance or you may as well shift the business model to index funds.