How transparency is reshaping the asset management industry and rebuilding investor relationships

Imagine going to buy bread from a baker who promises to try his best to bake a good loaf, but cannot promise the outcome, nor tell you how much it will cost. Chances are his bakery will not survive long. Yet, the nature of fund management means an investor is typically offered just such an ambiguous bargain, says Nitin Mehta, managing director, EMEA at the CFA Institute

Investors usually hire investment managers to assume investment risk with the aim of earning a fair return; in the process they incur costs. These three factors – costs, returns and risk – are the most fundamental and critical aspects of investing. Therefore, it becomes the professional obligation of an investment manager to be as transparent as possible about all three when communicating with clients. However, commercial motivations can tempt investment managers to do otherwise. Remaining largely silent about investment risks may reduce investors' concern. Not calculating or comparin...