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Global look-out – enhanced language around
[17 Jan 2015] Investors in the Global Bond Fund (no less) offered by Threadneedle Investment Funds have just learned from the company’s Short Form Report and Accounts 2014 that there have been some changes to the fund’s prospectus. Bit of a yawn, but they read on regardless to discover that one of these changes is: ‘Enhanced language around use of derivatives for Efficient Portfolio Management.’
Even if the readers know what derivatives are, they must surely wonder what ‘enhanced language around’ is supposed to mean. Maybe the folk at Threadneedle think old-style unenhanced language just doesn’t cut it any more for a fund with such a swanky name. Or maybe they think investors dim enough to be impressed by enhanced language won’t notice if the fund tanks.
Puffed-up language is a theme in Good Strategy, Bad Strategy by Richard Rumelt, who has worked on projects for NASA, Apple and the US Army. He says: ‘Bad strategy is not simply the absence of good strategy. It grows out of misconceptions and leadership dysfunctions. Once you develop the ability to detect bad strategy, you will dramatically improve your effectiveness at judging, influencing, and creating strategy. To detect bad strategy, look for one or more of its four major hallmarks: Fluff, failure to face the challenge, mistaking goals for strategy, bad strategic objectives.’
He goes on to describe fluff as ‘... gibberish masquerading as strategic concepts or arguments. It uses “Sunday” words (words that are inflated and unnecessarily abstruse) and apparently esoteric concepts to create the illusion of high-level thinking.’
Rumelt quotes a major retail bank’s internal strategy memorandum: ‘Our fundamental strategy is one of customer-centric intermediation.’ He translates this as : ‘Our bank’s fundamental strategy is being a bank.’