So it's goodbye and good riddance to Year 2000

It was the year of deserting fund managers and disappointed investors: it can only get better, writes investment columnist Brian Tora
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The Independent Online

I will not be sorry to see the back of 2000. It has been an unsettling year. Apart from the fact the company I work for was taken over, I moved office (more correctly, other people are moving me as you read this), we have enjoyed - if that is the right word - the wettest autumn since records began, the US nearly failed to choose a president and, if all that was not enough, it has been a particularly difficult year for making money on the stock market.

I will not be sorry to see the back of 2000. It has been an unsettling year. Apart from the fact the company I work for was taken over, I moved office (more correctly, other people are moving me as you read this), we have enjoyed - if that is the right word - the wettest autumn since records began, the US nearly failed to choose a president and, if all that was not enough, it has been a particularly difficult year for making money on the stock market.

Who would be an investment manager? I can think of no other business in which your mistakes are published daily in the paper. True, your successes are highlighted as well, but this has been a year when errors have been rather more common than winners. It is always easy to be wise after the event, but it is, perhaps, worth looking back at what the year delivered.

You would have been hard pushed to make money out of any market on average, but it would not have been entirely impossible. Take the UK for example. The FTSE 100 Index was down nearly 8 per cent from the start of the year by the middle of this week, but the small cap index was up by more than 5 per cent. The Nasdaq fell nearly 28 per cent from the beginning of January, although if you look at the performance from the peak to the trough, it recorded a near 50 per cent fall. The Dow Jones Industrial Average was a mere 6 per cent lower.

The position overseas was just as mixed. You would have seen a fifth of the value of your shares wiped out in Japan, but in Europe, excluding the UK, indices on average were barely changed, although the euro would have cost you money. In Hong Kong, a near 10 per cent fall would have resulted, only partially compensated by the dollar's performance.

Individual shares painted just as mixed a picture. Celltech recorded the biggest gain in the FTSE 100 Index, rising 140 per cent, while Amvescap, the fund manager, was not far behind and would have more than doubled your money since the start of the year. You could, on the other hand, have seen nearly three-quarters of the value of your investment in Sema wiped out, while Telewest Communications' share price this week stood at only a third of its January value. Even British Telecom would have lost you more than half your money, so even in well-known, established companies there was not necessarily any place to hide.

Examine the list of runners and riders in the UK's principle benchmark index and you realise it has been a difficult year. Investment houses have really had to earn their fees. Yet it has also been a year in which individual fund managers have deserted the major houses to set up their own niche boutiques with alacrity. John Duffield exited Jupiter with a fanfare, while the departure of the technology team from Henderson Investors to establish their own operation, or Nick Train from M&G to set up a boutique with ex-GT colleague Michael Lindsell, attracted rather less publicity.

Fund management has been transformed in the near four decades I have worked in this industry from a gentleman's pursuit to a professional, process-driven industry. But it is one where practitioners have little control over the events that shape their performance. The Year 2000 has been a salutary experience for many investors and a reminder that, as they say in the best advertisements, the money you invest can fluctuate and you may not necessarily receive back all you invested. Let us hope 2001 reverts to the more normal experience of the last two decades and delivers profit all round.

This is the last time I write as chairman of the Greig Middleton Asset Allocation Committee. I am not leaving, but the merger with Capel Cure Sharp will be consummated this weekend. I am now chairman of the Gerrard Asset Allocation Committee, the name with which both Greig Middleton and Capel Cure Sharp will continue. I hope it will become familiar to you all.

* The writer is Chairman of the Gerrard Asset Allocation Committee

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