In the 1990s, when I began my career as a fund analyst, identifying a good asset manager seemed straightforward: you looked at performance — and within that, some degree of persistency and style discipline, to confirm performance wasn’t just luck. Over the past 35 years, the world has changed and with it the way asset managers are judged.
Today, performance is just one part of a much bigger picture. Reputation, not just returns, has become the currency of trust. When asset managers fail to evolve with investor expectations and societal shifts, both performance and reputation suffer.
Reputation, at its core, is driven by behaviour: the day-to-day actions and decisions that signal a firm’s true values. It’s not just about what a company says, but how its people act when no one is watching. Senior leaders’ conduct is especially critical, and sets the tone for the entire organisation. But it also extends beyond the C-suite. A strong reputation is built when there is consistency of behaviour across the firm, grounded in integrity, transparency and accountability.
Investors now look deeper
The last few decades have exposed the flaws of a performance-only mindset. The rise of passive investing — faster, cheaper, more transparent – has redrawn the map. Defined contribution schemes have replaced defined benefit pensions, pushing investment risk onto individuals. ESG has gone from niche concern to mainstream expectation — and now into more uncertain territory.
Meanwhile, scandals from the collapse of Neil Woodford’s fund to the misconduct allegations facing Crispin Odey have shown how quickly reputational capital can evaporate, regardless of past performance. These stories, explored in my (Mis)Conduct, Money & Reputation podcast, have become cautionary tales for an industry where the closets are sometimes replete with skeletons.
Reputation must be earned across multiple dimensions. Strong, risk-adjusted returns still matter, but they’re not enough. Investors now look deeper: Is there process resilience? Team diversity? Effective stewardship? Clear alignment of interest? Cultural strength?
“It’s no longer enough to pretend that skill alone explains everything. Honesty about the roles of luck, timing, and risk-taking matters more than ever.”
Failure to meet these expectations has increasingly tangible consequences. Look at governance. Firms that neglect leadership renewal or fail to invest in compliance, and oversight often find themselves exposed. Woodford’s collapse wasn’t just poor stock picking, it was a failure in liquidity management, governance, and transparency. It wasn’t just money that investors lost; they lost faith.
Reputation, in this context, isn’t about perfection. It’s about predictability. Investors can forgive underperformance if it’s within a recognisable pattern. What they can’t tolerate is inconsistency, opacity or style drift. They want to know what they’re buying, and trust that it won’t change overnight.
Seeing through sales tactics
Indices have added further complexity. Market-cap-weighted indices increasingly dominated by mega-cap tech names have made it harder for fundamental active managers to outperform without taking on uncomfortable levels of tracking error. Yet some managers still cling to short-term outperformance as a sales tactic. In reality, the savvy investor sees through it.
Remember also the very design of commercial indices has changed. Many have been engineered to be more investable, more efficient, and harder to beat. It’s no longer enough to pretend that skill alone explains everything. Honesty about the roles of luck, timing, and risk-taking matters more than ever.
Recent noise around how “active” some such-labelled ETFs are, has brought familiar concerns back into view. The industry needs to demonstrate that it has learnt past lessons, or another reputational backlash may be upon us.
“Some managers have embraced this shift – investing in their people, upgrading systems, and being candid with clients. Others remain stuck in the past…”
Responsible owners & good decision-makers
The reputational landscape has also been reshaped by sustainability. Clients increasingly expect managers to be responsible owners, not just investors. Greenwashing – or even the perception of it – has done real damage. The current geopolitical climate has only polarised opinions, which is a real challenge for those “everything to everyone” asset managers.
Cybersecurity and technology investment have become critical, too. A high-profile data breach or systems failure can undermine trust far more quickly than a few bad quarters of returns.
Then there’s DEI. Firms that can demonstrate diversity across investment teams, leadership, and governance structures are increasingly viewed as more forward-thinking, more resilient, and ultimately more credible. Reputational strength now depends on who is in the room making decisions, not just what those decisions are.
Reputation is no longer the byproduct of performance. A firm’s ability to attract and retain both talent and assets, engage with companies, and navigate market shocks all hinges on trust. Trust is earned not just through returns, but through conduct, culture, and consistency.
Some managers have embraced this shift – investing in their people, upgrading systems, and being candid with clients. Others remain stuck in the past, still believing that numbers alone will carry the day.
Performance just isn’t enough anymore. A good, modern asset manager is one whose reputation is built not just on returns, but on purpose, integrity, and the ability to lead with consistency through complexity. Those who fail to see that shift may soon discover that when trust evaporates, performance becomes a footnote.
*David Masters is a director at the public relations firm, Lanson Team Farner, and a judge in the Funds Europe Awards 2025.
