Bad writing: the canary in the coal mine

“Bad writing is the canary in the coal mine. It tells you that you don’t know what you’re doing.” (Image by Capri23auto from Pixabay)

Which of these sounds better to you?

  1. “Give me my money back!” he said loudly.
  2. “Give me my money back!” he shouted.

The second is surely far better. Adverbs have their place, but if you can find the right verb to express what you want to say, that is always neater and punchier.

This is one example – a very simple one – of lexical diversity, which is largely about having a good vocabulary and using it well.

“A recent academic study found that lexically diverse hedge funds outperform.”

A recent academic study suggested that lexical diversity may be more important for fund managers than you might think. The study found that “lexically diverse hedge funds” – ones with strategy descriptions that use a rich vocabulary – outperform.

This is perhaps unsurprising. A dull, predictable vocabulary seldom heralds searing intelligence – or great engagement with the task at hand.

But there’s more to it than that. The study also found that lexically diverse hedge funds eschew tail risk and encounter fewer regulatory problems. By contrast, funds with “syntactically complex strategy descriptions” are more likely to violate regulations.  

“Lexical diversity […] has been associated with cognitive ability and honesty,” the study says. “Syntactic complexity […] has been linked to deceptive behaviour.”

“Syntactic complexity has been linked to deceptive behaviour.”

This chimes with our experience of teaching writing. A rich vocabulary stems from engagement and belief. Convoluted sentences happen when writers are hiding something or don’t understand it.

Good writing is important. It’s not just that bad writing gives you away. Bad writing is the canary in coal mine. It tells you that don’t know what you’re doing or what you’re doing isn’t right.

Forget the fudge: give it to investors straight when funds perform poorly

Effective communication with institutional investors could be the difference between retaining and losing clients. (Image by rawpixel from Pixabay.)

Institutional investors want to hear from fund managers more when their funds are performing poorly, according to a new study from CoreData Research.

No surprise there. Now for the tricky part.

Asset managers’ ability “to communicate effectively and regularly with institutional investors” could be the difference between retaining and losing clients, says Craig Phillips, head of CoreData Research International.

“Tell the truth. Perhaps you think you do. But is it the unvarnished truth?”

Regular communication is easy to organise. But how can you ensure that communication with your institutional (and retail) clients is effective when your fund is performing poorly?

May we suggest that you follow two simple guidelines? Both are maxims that your grandparents probably taught you but that often get forgotten in business.

First, tell the truth. Perhaps you think you do. But is it the unvarnished truth? Our fund performed poorly last month. Or is it a fudgy half-admission? The fund has seen strong headwinds. Performance was impacted by negative allocation effects.

“Fund managers write about ‘the fund’ as if it were an alien being that had landed on their desk from outer space.”

Second, take responsibility for your fund. Own it.

Often, fund managers write about “the fund” as if it were an alien being that had landed on their desk from outer space. They do that even when it’s doing well. When it’s doing badly, they push the dreadful creature away from them. Aargh! Nothing to do with me.

No one expects a fund to perform brilliantly every quarter, but they do expect to understand why it has performed poorly. You know why; it’s your fund.

So, give it to them straight. Tell your investors what happened and why in clear and simple terms. Be honest. And be personal. Talk about our fund, our performance.

They are sure to thank you. And they might stick with you as well.