Hedge Clippings | Friday, 14 August 2020

There's not much new that Hedge Clippings can add to the focus - some may say overload - that COVID has created over the past six months. It has come to dominate all our lives as we hang on for good news instead of bad, and most pertinently, when the search for a safe and effective vaccine will be completed, so the current restrictions will be finished, over, finito!

In reality, we doubt the battle will ever be complete, or finished.

Which got us to thinking about the ever changing nature of both the funds management sector, and particularly fund performances. Over the past 15 years or so that AFM has been researching and monitoring actively managed funds, we have seen an extraordinary change. For instance, pre-GFC hedge funds were considered secretive (which some were) and risky, and some downright dodgy (thankfully no longer in business), and overall purely the domain of wholesale investors and institutions and therefore out of reach of the retail sector (which most were).

During the GFC (for those who can remember back that far), hedge funds were blamed for causing volatility, as was short selling, with Gerry Harvey infamously declaring that "all hedge fund managers should be put up against a wall and shot", and ASIC, along with other regulators around the world, banned the practice, which incidentally didn't put a halt to the volatility.

Common sense eventually prevailed, and with some regulatory control, hedge funds were allowed to operate, and as a result, flourished not only for the big end of town, but for the benefit of retail investors as well. Over the following 10 years some thrived, some survived, and inevitably some failed, as have their long-only peers. That's how the market, and capitalism, works.

Over that time we have seen some spectacular successes - both from a business building perspective (for instance Magellan, with close to $100 billion in FUM after just 13 years in operation) and risk mitigation and performance, such as those we regularly feature. The point is that, like COVID, the funds' management story is not complete, nor finished, and never will be. New managers will come, and old ones go. Meanwhile, the performance of individual funds, and sectors or strategies, will also continue to fluctuate - such as the value vs. growth scenario that has been unfolding over the past few years as disruption and technology takes the lead.

Even Hedge Clippings' week is not complete, or even finished, until yours truly has hit the "send" button. Which is a neat segway into the difference between the meaning of the words complete and finished, which most readers would assume mean much the same as each other.

However, would you believe that on the website quora.com there's a whole section devoted to the topic of the difference between the two, presumably frequented by English language scholars and the occasional pedant (who? Moi?) who devote their time to examining the nuances between the two in minute detail.

The final word is left to an Indian gentleman by the name of Gopalkrishna Vishwanath, a retired structural engineer and scholar, who posted thus:

"No English dictionary has been able to adequately explain the difference between complete and finished.

However, in a recent linguistic conference held in London, England, and attended by some of the best linguists in the world, Samsunder Balgogin, a Guanese, was the clear winner.

His final challenge was this: "Some say there is no difference between complete and finished. Please explain the difference between complete and finished in a way that is easy to understand."

His astute answer: "When you marry the right woman, you are complete. But, when you marry the wrong woman, you are finished. If the right one catches you with the wrong one, you are completely finished."

His answer was received with a standing ovation."

And while talking of completely finished, here's a flashback to the times when Hedge Clippings included a segment to finish the week on a much needed lighter note entitled, "And now for something completely different". Some of you might find this video of an Italian auction tickles your sense of humour - or horror as the case may be.

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