Communication is key: Could the Covid-19 crisis spark a shift in how we assess value?

Silence is not always golden.

Businessman looking at stock charts on a mobile phone
"I passionately believe in active management and feel that allocation of every pound of capital should be made carefully rather than just 'sticking it in the market'. I believe we shouldn't reward poor management teams or companies acting inappropriately, for example. If you invest passively, you almost certainly will."

Are returns and price the only metrics for measuring value? What about communication?

Informative, timely, and insightful comment can add huge value, and its power should not be underestimated, particularly so in times of crisis when the outlook appears challenging at best. This is something that has become increasingly clear to us as we settle into our 'new normal' of home offices and indulgent afternoon snacking.

There has been an influx of people wanting greater and better forms of communication to stay connected during this crisis. More than just fund factsheets and pages of reports, people are eager to make the most of the technology available to stay informed.

Really, there is little excuse for companies not to be using tools such as Zoom or Microsoft Teams to help stay in touch with investors – not even a lack of high-brow titles in their bookshelf backdrop – and now could well be a good time to take a step back and think about the quality of the interactions you have with those managing client cash.

Yes, the price may seem right, but are they communicating with you quickly and effectively? Are they explaining how they are navigating the crisis, and what the potential impact could be on your portfolio? Do they come to you with answers before you even realised you needed to ask the question?

Silence is not golden in times like these, and communication could well prove an effective measure on which you can judge the quality of a manager.

As managers of multi-asset funds, we are particularly aware that our funds can make up a large proportion, even all, of a client's savings. With that comes a big responsibility to be transparent and available to our investors when the world tips upside down, arguably more so than a single strategy fund that is likely to be a component part of a portfolio and account for only a small percentage of a client's savings.

Importantly, fund managers should be tuned into the relevance of the information and updates they share with you. Now is not the time to become an armchair epidemiologist, nor is it the time for them to pretend to know what state the world will be in this time next year. It is the time for honesty and sticking to the facts in a language that is easy to understand. Underlying clients are unlikely to be overly interested in the likes of PMIs or yield curves. In the past, many have made use of glittering studios and cameras but with everyone filming or recording from home, the playing field is now level and it's the quality of content that counts, not flashy production values.

No one size fits all, of course. Some will be happy with a quarterly report or simple performance update; others want one-to-one time on a video call and a blow-by-blow account of how the market slump affected their portfolio – a manager which is flexible enough to offer different levels of interaction depending on your needs is a keeper.

Proper communication is powerful. It builds trust and understanding, ensuring investors are well-placed to make informed decisions about their investments and help them form that value judgement the Financial Conduct Authority is so keen on. The quality of those interactions can often separate the wheat from the chaff when it comes to managers.

Managers should be going above and beyond in their attempts to communicate effectively, and we urge wariness of managers that bury their heads in the sand and are resistant to change. Once this crisis has passed, as it must surely do, it will be those managers who reached out and offered support that stand out for all right reasons. As we move forward, perhaps communication will become one more metric on which clients can judge the success of a manager. This crisis could well prove to be a turning point.

The benefits of being pro-'active'

The press has been pouring over the new value statements that asset managers have been producing, leaping on those that have underperformed – quite rightly, too. It will be interesting to see those statements a year on when they include performance over the Covid period.

Communication is just one of many benefits of good investment management that you can't tie to a direct cost, like transparency and corporate engagement levels. How should we measure these criteria? Should we? Are they quantitative or qualitative? What should be the order of priorities and are they the same for every client? Clearly, these areas are very difficult for retail customers to make judgements, so this is where advice has a big role to play.

I will also be keen to see if the passive industry comes under more scrutiny on some of these softer issues when their value statements are pored over. For example, how were the constituents selected in specialist ETFs? What are the full transactional costs included in ETFs charges figures? How well did the 'managers' communicate with investors during the worst days of the crisis? When they say they are engaging with companies – how active are they really or are they just ticking boxes and filing reports?

I passionately believe in active management and feel that allocation of every pound of capital should be made carefully rather than just 'sticking it in the market'. I believe we shouldn't reward poor management teams or companies acting inappropriately, for example. If you invest passively, you almost certainly will."

For  more information, contact the team on 020 7399 0399, or visit

David Coombs is head of multi-asset investments and joined Rathbones in 2007. He is a member of our Investment Executive Committee as well as the Strategic Asset Allocation Committee . David is responsible for developing our investment propositions for national financial advisory firms and networks. He is the lead manager for the Rathbones Multi-Asset Portfolio Funds and the offshore Luxembourg-based SICAVS.

David previously worked at Barings for almost 20 years where he managed institutional and private clients via pooled vehicles and segregated accounts. He joined Barings in 1988 from Hambros, where he managed multi-manager portfolios for private clients.