A week is a long time. What a difference a week makes for Elmer Funke Kupper and his employer, the ASX, where he was CEO, and at Tabcorp, where he was, up until yesterday, a director. A week ago, both the ASX and Tabcorp downplayed Fairfax Media reports of a Federal Police probe into Funke Kupper’s role in what Fairfax alleges was a $200,000 payment by Tabcorp to the family of Cambodian Prime Minister Hun Sen at a time when the company was attempting to get an online gaming licence in that country. Yesterday, just before the 4pm close to the market, the ASX issued a shock statement that the CEO had resigned immediately — a few minutes later, Tabcorp issued its own statement saying that Funke Kupper had stood down for the time being. The bottom line, especially for the ASX, is that a CEO must be seen by all in the markets to be squeaky clean. The bribery allegations were put to both companies by Fairfax Media last week and, after the initial report, it seemed like ASX, Tabcorp and Funke Kupper were going to try to tough it out. How quickly things change. — Glenn Dyer

Dick Smith’s autopsy. And speaking of regulators and situations, Dick Smith is becoming a very messy collapse (they are untidy affairs at best) and ASIC’s decision to probe the collapse more deeply could worry Anchorage Capital, the vendors to the float (they bought it from Woolworths). And despite the best attempts of the Chanticleer columnist at the Financial Review to put the best possible complexion on that deal and Dick Smith’s eventual collapse, the whole affair does deserve closer scrutiny. And there will be one or two people at the RBA watching the probe very closely. After all, the central bank’s newest board member, former Macquarie Group boss Allan Moss, is still on the Anchorage website described as “adviser”. But there will be nothing substantial from the ASIC inquiries after one ASIC Commissioner, John Price, was quoted in this morning’s papers as saying yesterday that the amount of risk disclosure in the Dick Smith prospectus was “very substantial”. In other words, the warnings were there and it may be a case of shareholders — large (institutions) and small — not heeding these risk warnings. — Glenn Dyer

Masterful duds. They bestride the world’s financial markets, lionised by the (shrinking) business print and electronic media, masters and mistresses of the bourses, glamorous, wealthy and with the golden touch and more. And yet these active fund managers are increasingly under pressure for being high-cost duds — poor performers in terms of their investments and charging like wounded bulls. Their rivals are index trackers — funds that merely hug the S&P 500 or other benchmarks and, in most cases, charge very, very low fees (like Vanguard, the giant US financial manager).

Now, according to a study from S&P Dow Jones Indices, the active fund manager in Europe has been exposed as being a flop — a serial under-performer and after fees and charges, costing their customers a squillion in under-performance. The study has revealed that almost all actively managed share funds in Europe which invest in global, emerging and US markets, have failed to beat their benchmark over the past decade. Further the survey found that 100% of actively managed equity funds sold in the Netherlands have failed to beat their benchmark over the past five years; 95% of funds sold in Switzerland (so much for those Swiss gnomes) and 88% of those on offer in Denmark also under-performed.

Overall in Europe, S&P found in the study that four out of five active equity funds (80%) failed to beat their benchmark over the past five years, rising to 86% over the past decade. The data comes from S&P’s analysis of the performance after fees of 25,000 active funds on offer across Europe. Within that sample, 98.9% of US equity funds under-performed over the past 10 years, as did 97% of emerging market funds and 97.8% of global equity funds. S&P said  that share funds based in the UK did relatively well, by contrast. The majority of UK large and mid-cap funds beat their benchmark over one, three and five years. Good news, but over 10 years, all UK fund categories under-performed. Now watch for the sector to issue a barrage of rubbish statements and research to try and counter the S&P report. — Glenn Dyer

Peter Fray

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