Outlook: Rough Portfolio
DAVID ROUGH, chief investment officer of Legal & General and one of the architects of the group's elevation into the ranks of the UK's top five fund managers, is moving on from portfolio management to portfolio life. At the age of 50, he's had enough, and he's aiming to swop his full time job at L&G for a range of part time jobs in the City and industry. David "Portfolio Man" Rough is how he wants to be known, and as a much respected figure in the City, he stands a better chance than most of achieving it.
There's nothing untoward about his going, which is entirely voluntary and amicable. But there's always something symbolic that can be read into a high-profile departure, and in Mr Rough's case it should perhaps be seen in the context of the present debate over indexation. Throughout the 1990s L&G rode the trend towards low- cost indexation of investment funds, and Mr Rough was very much a part of that fashion. With the bear market of the past 18 months, the assumed advantages of index tracking are being challenged once more.
In a bear market, active fund managers and hedge fund operatives come more and more into their own, and if we really are in for a prolonged period of low or even negative equity returns, then the big indexed funds might in time look like pretty poor value for money. All of which brings us on to the delicate issue of whether past performance as a fund manager is any guide to the future.
The Financial Services Authority has stirred the controversy afresh by refusing to publish performance assessments with its online guide to the cost and risk of ISA and unit trust products. …