Simon English: Safety-first Allianz is hardly earning its money

Outlook: When lengthy articles appear in the Financial Times discussing the "end of the equity cult" is that a raging buy signal, a copper plated guarantee that markets are about to soar?

It's tempting to think so.

The piece yesterday was interesting and reasonable, as you'd expect, and there are lots of good reasons, some of them to do with pension regulations, why fund managers might continue to shun equities. Such matters are probably better discussed there than here.

The jaw-drop quote in the story comes from Allianz chief investment officer Nikhil Srinivasan, who says there's no need for him to buy equities. "We are delivering what policyholders want," he says of the €1.7 trillion (£1.4trn) under his control, of which just 6 per cent is in shares.

Which tells you that policyholders can't want, or expect, very much. Relentlessly buying the supposedly "safe", pathetically low-yielding bonds issued by America, Germany and the UK might be "low risk" in some ways but it hardly smacks of investment genius. And it might be pleasing for the governments concerned that gigantic asset managers are so content to just keep bunging customers' money their way, but then he's not paid to keep policymakers happy (or is he?). If your fund manager is simply playing it safe for a 2 per cent yield a year, it is very hard to see what the advantage is of giving him your money rather than looking after it yourself.

Allianz seems content to admit it isn't making the slightest effort to deliver a return better than inflation, which raises the question of what precisely it is for. The other question is why gilt-only fund managers should earn more than the cashier at your local bank. The skills needed would seem comparable. A rich bond fund manager should surely be an oxymoron, an impossibility.

s.english@independent.co.uk