Altair cashing in its chips is an act of capitulation

It’s the easiest thing in the world to sell out of a market — it’s a matter of pressing a button. The hard part is going back in.

It’s the easiest thing in the world to sell out of a market — it’s a matter of pressing a button. The hard part is going back in: When do you resume investing? And how might you time that re-entry in a market that is always uncertain?

Such questions of course will not bother the management at Altair Asset Management, who have made the extraordinary decision to hand back money to their investors.

Altair’s management called their move to throw in the towel “a seminal decision”. But it’s not really, it’s a capitulation.

At its worst this is an abrogation of responsibility. If you put your money with a fund manager, it’s a mutual pact — the idea is that the relationship should survive both good times and bad.

You, the client, decide when to sell, not the fund manager.

It’s hard to imagine the leaders of the local fund management industry ever making such a move: Geoff Wilson, a doyen of the game, has just launched a $121 million fund aimed squarely in the same domestic sharemarket Altair has quit.

Roger Montgomery, a top value investor, despairs of ASX share valuations but continues to search the market for successful investments because such value is always there — and that is, after all, his job.

The seniority of the team at Altair — and CEO Philip Parker’s 30 years in the market — was widely cited as a reason to read the move as a wider market signal. An alternative view is that the sellout tells us more about Altair Funds Management than it does about anything else.

To be fair to the Altair funds they have consistently beaten their benchmarks. However, that same track record perhaps points to a veteran team of managers who may have been tempted to get out while the numbers were good.

The hard facts are that stock picking has got a lot harder: Passive investment is surging across all markets and, crucially, fees are falling — witness Platinum Funds Management discounting in recent weeks.

Parker said on Tuesday he did not take the decision to cash out lightly, but he argued the Altair team were basically overwhelmed with concerns for both the sharemarket and the local property market.

Of course this market will correct — or crash — sooner or later … and of course it will recover too. That was true when Altair started in this business and it was still the case when they raised the white flag. Others, perhaps bolder and more energised will quickly take their place.