Fund managers search for new models in Monaco

The annual Fund Forum event in Monaco has always provided a gauge of the investment industry's health. While CEOs, enjoying the delights of Monte Carlo's top hotels and casinos, have for many years told us they have lost the trust of clients, this time may be different, if only slightly.

Since the turn of the century, those fund industry leaders making the annual pilgrimage for a few days of collective soul-searching on the Riviera have affected humility, while admitting to launching a whole raft

of useless products which bamboozle end investors and achieve below index returns. Their justification was always: "If we don't do it, our rivals will."

But this week, in the subterranean back rooms of the Grimaldi Forum, the Med's premier conference venue, head-scratching fund strategists were not only admitting the poor quality of their products, but pledging not to launch any more until the existing quality was upgraded.

Professor Amin Rajan of the CREATE consultancy and a tutor to many CEOs of FTSE companies, led much of the often uncomfortable discussions, calling for the discarding of old theories examining market behaviour and a move away from the large-scale industrialisation, which has led to fast international expansion, but a uniformity of poor-quality product across the industry.

One particular highlight for me was when representatives of four top-performing equity managers were asked to pitch their product to fund selectors. One, Samir Patel of Hermes, refused to do so, telling me that

all funds were pretty much the same, whatever the claims of their creators. Instead, he chose to focus on the pros and cons of investing in emerging markets, his group's favoured area. If there ever was a Eureka

moment in the usually complacent funds industry, this may have been it.