“Investment is most intelligent when it s most business-like.”
3. Total Commitment
Look beyond a posh office or pretty brochures or a big name. There must be a total commitment from the fund manager. On this, there can be no compromise. Appointing a fund manager is like entering a joint venture. It must be with a very committed partner.
The fund manager must put his money where his mouth is. He/she must sink or swim with the client and must do well because his clients have done well. It must be like partnership instead of a mere client-manager relationship. How can our clients be sure that CDAM delivers this total commitment?
3.1. Owner-Operated & Independent
CDAM is not just a department, neither is it a subsidiary of a large institutional set-up.
In addition, frequent changes of corporate ownership leads to inconsistent investment styles and a sense of insecurity among staff.
3.2. Focus – Only One Source of Income
The management and performance fees that we receive from clients equals 100% of our revenue.
As partners, we sink or swim together with our clients.
3.3. No Conflicts Of Interest
At CDAM, there is no need for a “Chinese Wall” as there are no conflicts of interest.
Fund managers should be remunerated by management fees alone and not earn commissions of kind. Our income does not come from underwriting, corporate finance and advisory work, loan syndications, stock broking or others. We are free to conduct business with any third party.
Table 1 below shows an example of a typical big size financial institution with many businesses, including fund management.
XYZ Holdings and its Subsidiaries
| Activity | Profit/(Loss) before tax for year ended 31/3/98 |
Profit/(Loss) before tax for year ended 31/3/97 |
|---|---|---|
| RM’000 | RM’000 | |
| Merchant Banking | 150,827.00 | 301,897.00 |
| Commercial Banking | (29,777.00) | 80,095.00 |
| Finance | 63,368.00 | 380,680.00 |
| Credit & Leasing | 28,813.00 | 60,103.00 |
| Stock and Sharebroking | 66,287.00 | 191,143.00 |
| Insurance | (25,830.00) | 6,625.00 |
| Offshore Banking | 282.00 | 17,275.00 |
| Unit Trust & Asset Management | 848.00 | 1,869.00 |
| Others | (49,614.00) | (9,314.00) |
| Total | 205,204.00 | 1,030,373 |
Source: Audited Consolidated Results for the Financial Year ended 31/3/98
3.4. Brain, Not Brawn
In fund management, a big size company certainly does not mean it has a superior performance. The nature of the business is different. At a time when the big players are increasingly dominating the industry, Capital Dynamics Asset Management or CDAM believes that more and more clients are impressed by brain rather than brawn. Not forgetting that being big did not save the dinosaur from extinction, we rely on insight, creativity and sheer determination to succeed for our clients.