Greetings from NED land. Since my last article, I have helped produce our first assessment of value (AoV) report to conclusion and publication.
Communication is a powerful tool for these new disclosures. Take the Covid-19 strategy, the largest single public communications exercise since WWII. It has brought into sharp relief the use of statistics.
Suddenly, R numbers are everywhere, percentages of fractions of percentages, of unknown origin numbers, are banded and flash across our screens.
It made me reflect on a recent webinar by the excellent Holly Mackay at Boring Money. She reviewed a number of AoV reports and noted good and bad points. This form of osmosis is essential for our industry to improve and breakdown silo mentality.
Much of the ensuing debate focuses on the delivery of message more so than the metrics. However, there is also a friction here between clarity and transparency. It is not a contradiction to say there can be absolute clarity of a misleading message just as much as a lack of clarity within full disclosure.
Some firms have sought to present themselves as if 'being led by the science' with colourful, innovative yet tricky-to-follow infographics that BoJo would be proud of. Yet there are also glaring omissions and distractions lurking that few, bar the most technically minded, will spot.
This is a difficult area for fund NEDs to balance (one I'm sympathetic to) and not nearly as straightforward as commentators would have you believe.
How can the public at large come to understand percentages and medical statistics, for Covid-19, but not the relatively accessible metrics for fund managers? Does simply reaffirming a statistic or metric enough times help to sink a message in?
Yes, and every day the public are becoming armchair epidemiologists. The coverage and media focus on the 'R metric' clearly shows the public can get it when hammered into them relentlessly.
Should then fund boards train in the art of propaganda to get their message across? Does the industry need a single V metric? No.
The raw truth is that investors do not know what they don't know. When it came to COVID they do. The level of investor education has improved little in the past decade despite attempts to address it.