Ann: Funds Under Management - September 2022, page-129

Over the long term both PTM and MFG have significantly outperformed the MSCI.

Over the last 5-7 years of tech madness fueled by ZIRP they have both failed miserably, hence their current predicament and the pillaging they are currently facing.

Cathie Wood is a product of the post GFC exuberance and the absolute poster child of how the tech boom comes to an end. Choosing her as an example of an "active" manager could hardly be construed as typical of the wider pool of managers.

I will be the first to concede most active managers do not outperform their benchmark in the long run. Yet I will contend, the best nearly always do. When the market loses its head and momentum driven index funds go along for the ride, I sleep very well with my international fund holdings not partying so heavily, looking for less spectacular investments. That does not mean in any short term, that less spectacular cannot be punished in a market sell down. It means they will recover, based on business fundamentals while the specs wither on the vine of a hope and a prayer.

No one will be able to judge index v active until markets revert to their mean, which in my view based on the rising risk free rate, will be considerably lower than where they currently are. That does not auger well for MFG or PTM or any listed manager. They, like index funds will either lose funds or attract them based on performance.

I don't know whether MFG will retain, gain or lose funds as a result of inflows/outflows (rather than market movements). I am prepared to punt that brains beats momentum in the long run and that every style has its day in the sun. Post GFC index funds have outperformed even the smartest investors, whose experience taught them not to put their hands in a fire. We know are able to see the "fire" was a virtual one and not real, so fortune favoured the brave. The fire that 2023 will bring will be real, and the index funds are all in, as their Trust deeds demand them to be. Good luck with that over the remainder of this decade. Even millenials can understand you get what you pay for.

GLTASH