NICE - So is the funds industry in crisis or not? At the 2003 Fund Forum International conference in Nice, there appears to be some difference of opinion on the issue.

According to some, the publication of KPMG/Create report ‘Revolutionary Shifts, Evolutionary Responses’ is proof positive that the industry has failed to get its message across clearly. But others have suggested that the industry should not be on the back foot and that the blame lies elsewhere.

The author of the report, Professor Amin Rajan, CEO of Create, stands by the content of the report, which does not suggest the industry is all that healthy.

Rajan urges the industry and the media not to react negatively however, but to use the document as the basis for evolution: “This is a defining moment for the funds industry; a chance to look for a new model that can deliver in good times and bad.”

He has some sympathy with those who suggest that blame lies elsewhere: “If investors feel cheated, it is not because of what the fund managers have done.

There are others to share the blame; pension trustees for trying to balance their long term targets by investing in higher risk assets; consultants, for investing with managers who have not performed; and investors themselves, for getting carried away.

If there is an unofficial theme for Day One of the Fund Forum conference, it is probably that the system needs improving and, because of what has happened to equity fund investors since 2000, it will be improved.