The announcement Daniel Godfrey is stepping down as director general of the Association of Investment Companies after 11 years at the helm is an appropriate time to focus on the performance of one of the main trade bodies representing the asset management industry.
Godfrey’s tenure at the AIC has seen the organisation change its name from the AITC and broaden its remit to incorporate the likes of VCTs and other closed-ended companies. For this, Godfrey deserves praise.
Because of his sales and marketing background, Godfrey has been acutely aware of the need to present investment trusts as a relevant and modern investment vehicle – something older members of the industry have not always recognised.
Periodically, the future of a 200-year-old industry is questioned – sometimes by Investment Week – but Godfrey has played his part in ensuring its continuing relevance.
His period in office has been punctuated by some significant challenges and some significant victories, but inevitably the challenges have attracted far more attention than the victories.
He played his part in the successful VAT case, which benefits ITs to the tune of £40m a year, and has achieved changes that will make it more tax-efficient for ITs to investment in bonds.
Neither of these victories are what could be described as ‘sexy’ but the benefits of both will be felt in the longer term.
The one period when ITs were ‘sexy’, at the turn of the century, ended with the split-capital problems.
Godfrey handled himself well at this time and despite criticism from some in the industry for not defending the sector robustly enough, he achieved the right balance between standing up for what is right about ITs, but not trying to defend the indefensible where there was wrong.
However, the generic marketing campaign for the industry, ITS, which many trusts and management groups poured a lot of money and commitment into, was a singular failure and as key supporter of the initiative, Godfrey was lucky to stay with the association in the wake of this.
The lesson the investment trust industry learnt then was one the unit trust industry has learnt in the 1980s – that generic advertising campaigns for financial products as complicated as investment funds just do not work.
Under Godfrey, the AIC has spent a lot of cost-effective time and money on much smaller investor and intermediary roadshows, which has paid dividends with the number of individual private investors who are on the share register of ITs.
The reality is, investment trusts will never be mass-market products, but with assets under management for AIC companies of over £75bn, they will remain important.
On balance, Godfrey can be proud of his achievements over the past decade, and the most positive achievement going forward for the association would be for more intermediaries to regularly use investment trusts and other closed ended funds on behalf of their clients.
We wish Godfrey good luck with his next career move.
