Gosling Grouse: Bye bye easy money

GOSLING'S GROUSE

Much is made by fund management groups about the alignment of interests. The theory goes if the manager's interests are aligned with the investor everyone is a winner.

It is an argument used by small boutique management groups where the fund managers, management and staff all own equity in the company. If fund managers have their own wealth invested in their own funds then that seems like the most convincing argument for a genuine alignment of interests. The issue of alignment gets a little blurred, however, when the manager has their own wealth invested in what rapidly grows to a fund of hundreds or even billions of pounds. Things get even more blurred when the manager can earn bonuses or even performance fees. Management groups often argue this...