Asset management makes money, but only for the managers

There is an interesting ranking in Maciej Samcik's blog, a journalist from Gazeta Wyborcza, which shows statistically credible rates of returns on managed assets of Polish clients in the last decade.

The conclusion is that in the last decade half of Polish asset managers earned less than average return on money market funds! In other words, managers charged 3-4% of other people's money every year for delivering results not different than putting one's money on a bank deposit!

I wonder how the ranking would look like if the returns of all funds were risk-weighted to see whether asset managers created any alpha, that is additional profit above risk-adjusted returns. I bet that there would be hardly any! This is reflected in another text on Samcik's blog documenting that since the bottom of the crisis only one third of asset management funds have beat the market.

It should therefore not be much of a surprise that I very much welcome the arrival of the first ever ETF fund traded on the WSE: it will manage people's money much better than asset managers, with only a 0.5% fee...