Just when you thought it was safe to go back into investing, who appears to make you nervous again? Jon Maguire.
Remember him? The bloke who fronted Arch Cru and attracted about £300m into the funds he was punting around with a mixture of champagne, pretty girls, commission and private equity.
Over the last year or so, the whole episode has been an embarrassment to the industry and Maguire has been telling everyone who would listen it was not really his fault.
Of course, it was totally his fault. At the end of the day, nobody forced all the advisers who supported the Arch Cru funds to do so – but put a fat kid in a sweet shop and the temptation to stuff his face will be hard to resist. And so, for some advisers, commission, plus champagne and a hot investment story, would be too hard to resist – and it was.
Again, there is nothing wrong with what the Arch Cru funds were investing in – private equity – but this is never going to be a mass-market asset class. If you want to invest in the sector – and there are good reasons at the moment – there are plenty of excellent closed-ended funds listed on the London Stock Exchange managed by groups with excellent long-term pedigree such as J.P. Morgan, Henderson, F&C, etc. Not Arch, which barely anyone had heard of until Maguire got his marketing skills into overdrive.
Don’t get me wrong: I am not against innovation in the industry – in fact, it is the life blood of investing. But I am against marketing and hype over the substance of investment.
Do not forget, Maguire was peddling highly illiquid investments in 2008 just as the last bit of liquidity in the system was being drained out and stopped with the Lehman collapse.
Now he is punting a fund investing in rental property in areas where there are “London’s young professionals and wealthier, often overseas, students” offering an enticing 5% yield and 5% growth – that magic 10% number.
Perfect timing given employment levels and the cutback in higher education funding is seeing a reduction in the number of courses being offered.
Mr Maguire, if you want to redeem yourself for the industry, concentrate of getting advisers and their clients back their money and don’t start punting around even more half-baked investment propositions. We don’t need any more of your bright ideas – there are enough proper well-thought-out ones from groups that make sure what they are promoting passes the acid test. Would you sell it to your own mother?
I would sell my mum an absolute return fund run by a leading group like BlackRock or Cazenove, but I would not sell her anything you had come within a continent of. Would you like me to say it any clearer?
If you are bored and have nothing to do, I am sure there is something you could do that would be of use to the country – but it is not fronting investment propositions. I will have a think and come up with some new careers ideas for you…
I know: you could give Robert Green goalkeeping lessons – even you could have saved that one.
Lawrence Gosling is the founding editor of Investment Week. His views are his own, any comments to him at lawrencegosling@sky.com
