Price vs. Value

Thoughts from GemCap UK Chief Executive Stuart Alexander on price vs. value, and some of the misconceptions and miscommunications between Fund Managers and Investors.

The old adage that we know the price of everything but we don’t know the value of anything is so true in the Funds industry. I have spent the last 35 years having to defend the Active Funds industry for what is often seen as excessive in so many ways. Whilst that is often very true in some exceptional situations, the vast majority of firms do well but aren’t all driving Ferraris and drinking Dom Perignon with their Caviar blinis. Back in the heady early days of the Funds industry from the mid-eighties to the mid-nineties there were very few actual Fund Management businesses compared to today and as result some Asset Managers were able to take significant market share with some sizeable asset growth. The fees were still very rich compared to today and no one really commented on it. It was what it was. You paid the price as there was nothing to compare it with.

Things starting to significantly change in the mid-nineties with the advent of the platforms such as Cofunds and Funds Network. More platforms came on board and over time the whole value chain has transformed beyond recognition. It accelerated post the RDR implementation of 2013 and has continued at a pace with more and more pricing pressures coming from the industry and in particular competitive passive products. Today we find ourselves in a Funds industry that is more fundamentally different from the Distribution channel than it has ever been. The actual Fund Managers haven’t changed other than there are many more firms around with a plethora of products available. Some would say too many, but I will come back to that.

A couple of weeks ago I decided to listen into some “Legends” of the industry on an OCTO Members webinar. Richard Philbin, Jon JB Becket and Mark Dampier were not grilled but more lightly toasted about a number of points. Mainly fees for Funds, performance fees and that old chestnut: the number of underperforming funds surviving. What struck me about the conversation was the confusion about how Fund charges are made up: the difference between OCF and TER, for example, as well as many not appreciating the true costs for running a Fund from the point of a Fund Manager. There seems to be a view that Fund Managers are ripping people off and that there is no alignment of interest between them and investors. What I find perplexing is why this debate needs to be had, or at least is this conversation the right one we should be having? Fund Managers need investors and investors need Fund Managers, passive and active, in order to develop the returns they are seeking as advised by their Investment Advisers etc. So why the apparent conflict? Lack of understanding is often the reason that conflicts take place in the first place.

When it comes to running a Fund, the one thing investors need to understand is that a Fund is not cheap to run. On paper it may look simple, and thus why the rate that is charged looks disproportionate to what actually is paid by investors. The list is very long from regulatory costs, capital costs, legal, audit, CoSec, platform onboarding and don’t get me started on distribution costs such as the dissemination of data to providers who charge the Fund to receive the data and put on their website. Figure that one out!  There are so many firms that feed off a Fund that it becomes eye watering when you start to list them. Investors may end up paying more because another investor needs the Fund on a particular platform or that the data has to be shown on a particular website. Technology does not allow us today to strip out these costs at an investor level and I doubt that will ever happen – but you never know.

Performance fees was another topic they touched on and for a rare moment I agreed with Mr Dampier and also scarily Peter Hargreaves. It was some years ago when he had a real go at me about Performance Fees and to be fair he had a point but being a fellow Northerner I was struggling to back down – dangerous with Mr Hargreaves! Suffice to say his point and one that Mark also opines on is that the IM fee is the performance fee and that if an IM performs well, then the assets grow and their ad valoreum fee means they benefit. Creating an extra level of performance fee on top can build up a sense of over-fishing and for some investors the alignment of interest is lost; for others, they see it as an IM as doing their best to produce excellent returns because everyone benefits whilst others may see it as too much risk… gold and glory come to mind.

The other argument that seems to be persistent in certain circles is the plethora of underperforming funds and why they continue to exist. Basic maths will tell you that 50% of funds will underperform the average so do they get culled and then the next 50% of the top 50% gets culled and so on? Of course not – but why do they survive? Simply, investors stay in them. Why? Due to inertia or because they are trapped? Inertia is often the main reason as investors may not realise or monitor. Advisers should be monitoring and actioning against these poor funds by disinvesting. By that action the Fund becomes too small to be profitable and natural selection will take place. However the vast majority of those trapped are sadly at the whim of a Pension fund that allocates to an internal fund, and it can be in the interest of the Asset Manager to allocate to that asset class or sector even though they are poor in that, unless they use external funds.

So yes, there are some pretty poor managers hidden in some of the big Managers who get away with underperforming relative to peers and markets. These lifers are invariably benchmark plus and if they underperform one year they will make it up the next year… probably. But they survive because they are allowed to. No Adviser or Private Client is exposed to them and probably doesn’t even know who they are. Where advice is involved or there is direct contact then those Managers have got nowhere to hide and invariably, they get their just desserts. Many Funds will have orphan clients from eons ago and, as we see nearly every week with more Fund closures, there is a drive from Investment Managers to rationalise non-competitive products. Some would argue that this is on the back of the Assessment of Value drive from the regulator, but the reality is that a lot of Funds are closed down each year or merged away based on economics.

Investment Managers need to remain competitive, and their shop windows are their funds. Some use Fund Farming techniques where they always have Funds available no matter what cycle we are in, and others will just stick to one asset class or style to create a definite competitive advantage. We all have our favourites in certain asset classes and we believe that the firm is excellent in that space but not necessarily in another asset class until they poach a star from somewhere else. It is very rare when an Investor/Fund Selector will choose all Funds from one IM but will rather stick with one or two. In short we should get IMs to focus on what they are good at and on the whole Boutiques do that whereas the larger Managers try and be all things to all men which leads to the huge proliferation of new Funds. In recent times the growth of ESG from IMs has been almost tidal wave-like in the delivery, with everyone suddenly being amazing in the space. Maybe I’m just a cynical old bugger but I say stick to what you are good at and stop trying to be good at everything. Even a modern athlete sticks at a maximum of 7 events in the Heptahlon!

In other news...


You must submit your agreement before access to the site can be granted


This website is directed at institutional clients and individuals who have taken appropriate professional advice, who possess the necessary experience, knowledge and expertise to make their investment decisions and properly assess the risk that it incurs.

Gemini Capital Management (Ireland) Limited, trading as GemCap, is a limited liability company registered under the registered number 579677 under Irish law pursuant to the Companies Act 2014 which is regulated by the Central Bank of Ireland, reference number C155302. Its principal office is at Ground Floor, 118 Rock Rd, Booterstown, Co. Dublin, A94 V0Y7 and its registered office is at 1 WML, Windmill Lane, Dublin 2, D02 F206.

GemCap acts as management company and global distributor to GemCap Investment Funds (Ireland) plc.

GemCap Investment Funds (Ireland) plc is an umbrella fund with segregated liability between sub-funds incorporated as an investment company with variable capital registered under the registered number 485081 under Irish law pursuant to the Companies Act 2014 and authorised by the Central Bank of Ireland, reference number C67292, pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (as amended) ), having its registered office at 1 WML, Windmill Lane, Dublin 2, D02 F206(“the Fund”) .

The contents of this site have been prepared solely for information purposes and is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. GemCap and the Fund does not give or make any guarantee, representation, warranty or other promise or confirmation (whether express or implied) as to its accuracy or completeness.


Risk Warnings

Please remember that the value of investments and the income from them can fluctuate (this may partly be the result of exchange rate fluctuations) and you may not get back the full amount invested. Past performance may not a reliable guide to future performance. A comprehensive list of risk factors is detailed in the Prospectus and the key investor information document (“KIID”) and an investment should not be contemplated until the risks are fully considered. The Prospectus and KIID can be viewed at

GemCap does not provide financial, investment, tax or any other professional advice in any way and none of the information on this site should be construed as such. None of the information contained on this site constitutes an offer to buy or sell or a solicitation, recommendation, invitation by or on behalf of GemCap to buy or sell any security, product, service or investment. Any opinions expressed on this site do not constitute investment advice and independent advice should be sought where appropriate. The view and/or opinions expressed by GemCap through this or any other platform, may be subject to change.

The shares in the Fund have not been and will not be registered under the US Securities Act of 1933 (the “1933 Act”) as amended or the securities laws of any of the states of the United States. The Shares may not be offered, sold, transferred, pledged or delivered, directly or indirectly, in or into the United States or to or for the account or benefit of any US Person except pursuant to an exemption from, or in a transaction not subject to the registration requirements of the 1933 Act and any applicable state laws, nor in any jurisdiction in which the Fund is not authorised to be publicly sold. The Fund is available only in jurisdictions where their promotion and sale are permitted.

The information contained on the website may not be redistributed directly or indirectly to any citizen or resident of the United States or any other jurisdiction where its distribution may be restricted by law. It is the responsibility of persons accessing the website to ensure compliance with the above.

Disclaimer for Investors in Switzerland

The Fund and its sub-funds, Calamos Global Convertible Fund and Third Avenue Real Estate Value Fund has been approved by the Swiss Financial Market Supervisory Authority FINMA (“FINMA”) for offering to Swiss non-qualified investors.

This website may contain advertising.

In Switzerland, the representative is ACOLIN Fund Services AG, Leutschenbachstrasse 50, CH-8050 Zurich, whilst the paying agent is Banque Cantonale Vaudoise, Place St.-François 14, CH-1003 Lausanne.

Swiss investors may obtain free of charge from the representative in Switzerland, the relevant fund documents, namely the prospectus, the key investor information documents, the articles of association, as well as the annual and semi-annual reports.


Past performance results are no indication of future results. Issuance and redemption commissions are not included in the performance figures. Performance results referring to a period of less than twelve months (year-to-date-performance, start of investment fund within the last twelve months) are no reliable indicator for future results due to the short comparison period.


Additional information for Qualified Investors in Switzerland:

The below-mentioned investment funds, which are also disclosed on this website, are neither registered with FINMA nor under contract for representation to Swiss investors. These investment funds may not be distributed neither to Swiss non-qualified and qualified investors nor exclusively to Swiss qualified investors:


GemCap Investment Funds (Ireland) Plc

Atlantic House Defined Returns Fund

Atlantic House Global Defined Returns Fund

Atlantic House Total Return Fund

Atlantic House US Enhanced Equity Fund

Causeway Defined Growth Fund

GSI Global Sustainable Value Fund

GSI Global Sustainable Focused Value Fund

London & Capital Global Balanced Fixed Income Fund

London & Capital Global Conservative Fixed Income Fund

London & Capital Global Defensive Equity Fund (this Fund has terminated and accordingly, Shares in this Fund are no longer available for investment)

London & Capital Global Growth Fund

London & Capital Global Growth Fixed Income Fund

London & Capital Global Star Equity Fund

London & Capital Global Balanced Fund

Principal Asset Allocation Fund

Semper Total Return Fund

TEAM International Equity Fund




This GemCap website and material contained herein (including information from third parties) is provided ‘as is’, without any representation or endorsement made and without warranty of any kind whether express or implied, including, but not limited to, the implied warranties of satisfactory quality, fitness for a particular purpose, non-infringement, compatibility, security, completeness and accuracy.

By entering this site, you acknowledge and agree that the use of this site is at your own risk and to the extent permissible by applicable law, in no circumstances, including (but not limited to) negligence, shall GemCap be liable for any direct, indirect, incidental, special, consequential, or punitive damages, losses, costs or expenses nor for any loss of profit that results from the use of, or inability to use this site or any material on any site linked to this site (including but not limited to any viruses or any other errors or defects or failures in computer transmissions or network communications) even if we have been advised of the possibility of such damage. In addition, no liability can be accepted by GemCap in respect of any changes made to the content of this site by unauthorised third parties. All express or implied warranties or representations are excluded to the fullest extent permissible by law. We do not warrant that this site does not infringe any intellectual property rights of third parties.

No data transmission over the internet can be guaranteed as totally secure. Whilst GemCap strives to protect such information and every effort has been made to implement security protocols, in line with relevant legislation to ensure safe processing and storage of any data transmitted, we do not guarantee and cannot ensure the security of any information which you transmit to us. Accordingly, any information which you transmit to us is transmitted at your own risk.

The GemCap website is not a substitute for independent professional advice and users should obtain any appropriate professional advice relevant to their particular circumstances.

The information on this site is issued by GemCap.



If you use the internet quite a bit, there’s a good chance you’ve heard of cookies.

But what are they?

Also known as HTML cookies, tracking cookies or magic cookies, these tiny files are automatically downloaded by your computer when you’re browsing online. Don’t worry – they’re perfectly safe. But we’d still like to take a moment to explain what cookies do, which ones we use and how to remove them – if you really want to.

Are Cookies Safe?

Yes, cookies are safe. The information they collect is completely anonymous. We never, ever, collect personal information using cookies. What’s more, cookies are not harmful to your computer, they take up minimal space and they can be removed with just a few clicks.

GemCap’s Cookie Functionality

  • Cookies provide enhanced functionality and speed to our site
  • These cookies help us to recognise your computer when you visit and enable us to improve your visits to our website
  • Cookies assist us in identifying what kind of visitor/user you are, for us to provide you with the most relevant content

How Can I Remove Cookies?

Most computers are set to download cookies automatically, so if you’re happy with everything you’ve read, simply carry on as you were. However, if you’re at all concerned about having cookies on your computer, deleting them is simple.

Show me how to remove cookies

Likewise, you can also change your computer settings so that it won’t download any more cookies.

Show me how to change my cookie settings

The information on this site is issued by Gemini Capital Management (Ireland) Ltd, which is registered in Ireland No. 579677. The registered address for the company is 1 WML, Windmill Lane, Dublin 2, D02 F206, Ireland.