I get asked a lot by fund managers whether they ‘should’ be having listed versions of their funds, and often offer the same commentary in response, that of – it depends on what you are trying to achieve.
My observations are that increasingly a growing segment of consumers and their advisers are seeking to get more involved with their investment portfolios, and like most things today a key factor in decision making is not just what is the essence of the end product, but what is the experience in going from idea to fulfillment. In the retail world, businesses know that every click, second, or even millisecond can dramatically impact the completion rate of customer actions – that’s why we often get emails to follow up from retail sites when we abort halfway through the ordering process because of some delay, glitch or just poor user experience. As consumers, we want the ease of use, speed, and certainty.
As consumers we also want things to be more and more ‘about me’ – it makes me feel good, it makes me feel special, it actually can be better for me, I can discover more, and most are prepared to invest some time, money, effort or risk in doing so.
Just now apply this to investing in different investment structures and packaging. Listed investments (especially ones with market makers) are often quick to execute with certainty, at a known (or set) price, and I can set up an account quickly online in many cases. I also can make a portfolio of them reasonably easily, often with help from a level of expertise, some of which is publicly available. With listed funds, I can also get access to the value of professionals to make investment decisions for me in areas that I am not comfortable.
Compare this to an alternative experience that may involve application (even paper) forms, unknown pricing, unknown timeframes, and unknown controls. Is that like trying to buy an app on a phone where you don’t know the price, don’t know when you are going to get it, and have to go to your computer to complete the transaction ?
So, should fund managers create listed funds ? Well if they want to be more accessible, easier to have consumers access their expertise then yes. Which then bodes the question for some funds, what is the alternative, and is it sustainable ? For some yes because of the nature of their specific fund and investments, but that may be like then trying to find buyers for boutique products that are for specialist investors, perhaps not the consumer mainstream, and their advisers.
As William Gibson said ‘ The future is already here, it’s just unevenly distributed’ , perhaps the shift to listed investments helps more evenly distribute the use of technology and techniques for improved investing experiences and hence outcomes.