Shaming funds that fail investors

IN the cosy, fee-driven world of fund management, Jonathan Compton is not a popular man. The former Samuel Montagu and Baring Asset Management fund manager aims to shake up the multi-billion pound industry with a controversial new fund that promises a 'no gain, no fee' commission structure and rebates for chronic underperformance.

This is, of course, unheard of in conventional fund management circles, where managers take fees of up to 1.5% in good years and bad. In the good years, a monkey with a set of darts could have made money selecting shares, and those fees were easily earned.

Now the bad times are here, many funds are failing dismally to shelter their investors from the slump, revealing themselves to have been closet, but expensive, tracker funds all along. Yet the fees remain the same. Compton, best described as a maverick, certainly has an eye for publicity, from the provocative name of his new fund - Bedlam Asset Management - to the reproduction of Munch's The Scream on the prospectus cover, complete with a widget that issues a blood-curdling shriek when it is opened. Having made his millions in the bull market, he is clearly on a crusade and promises to be fiercely critical of conventional fund managers.

The performance tables so beloved by the industry will be a target, and he intends to name and shame. This will not go down well and libel law firm Mishcon de Reya is already onside for the expected retaliatory action from the establishment. Take away the hype - Compton says he will work for the minimum-wage of £4.10 an hour to keep costs down - and he clearly has a point. Investors have been very poorly served by the industry in recent years.

There is no guarantee that the Bedlam man, who is putting £700,000 of his own cash into the fund, will do any better than the rest of them. But he is clearly out to make waves and, who knows, he might just make some money along the way. It should at least be an entertaining ride.

Shocking States

NEWS of a new $3.3bn black hole in bankrupt telecoms giant WorldCom is not exactly a surprise, nor will it make much difference to the eventual fate of the group. As one analyst said, the horse that was already dead just turned out to be even more dead than it first looked.

But the impact of these latest revelations will heighten the highly nervous state of the American market, already on tenterhooks ahead of the 14 August deadline for chief executives to swear on oath that their latest results were accurate. Several hundred company chiefs have yet to sign and further shocks are inevitable.

Carer needed

THERE was only one surprise in yesterday's news that the logistics director of Mothercare is to be replaced - and that was that he was still there. The group, without a chief executive since Chris Martin fell on his sword last month, has been brought to its knees by warehousing and distribution problems.

These difficulties, we were assured, had been sorted out but reports of further glitches saw another 14% slashed from the share price yesterday, bringing it down to 105p.

That values the group, one of the best-known names in the High Street, at a paltry £74m. It surely cannot be much longer before someone decides to take it out of its misery. If not a venture capital firm, then how about Philip Green of Bhs sweeping back in to pick up the part of the Storehouse empire he so sensibly left behind last time?