Fund managers play an important role in free market economies around the world, controlling more than $100 trillion of financial assets globally, with the ability to invest that capital into companies and to influence the way in which they are managed. Most research and literature on asset management focuses on investing – how fund managers do it, who does it well, the ways in which it has changed, as well as advice on how others can invest too. This leaves a largely unfilled gap looking at the rest of an asset manager's business, ranging across sales, operations, governance, marketing, risk management, finance and compliance. It is these functions that are needed to turn a solo stock picker into a successful business. They are integral to making investment management commercially viable. And it was these aspects that moved from the periphery to centre stage when Neil Woodford, the UK's best-known fund manager, was forced to close Woodford Investment Management in 2019 amid an acrimonious split with the firm overseeing its operations. Around 300,000 investors are still trapped in Woodford's former flagship fund (Martin 2019).

This is not just a British story. Fund manager scandals have broken in recent years at Swiss asset manager GAM, French firm H2O Asset Management, and German Union Investment. Unlike Woodford, these asset managers are backed by large financial institutions. H2O was owned by Natixis Investment Managers (part of French banking group BPCE) and got into difficulties because of its relationship with controversial German financier Lars Windhorst, while GAM was caught up with disgraced Australian financier Lex Greensill. The chief executives of Natixis IM and GAM have both stepped down since these revelations broke.

Understanding how such problems can arise is part of how these businesses make money, the nature of their business models, the role of their compliance and oversight functions and how they incorporate investors’ interests. Each of these will be examined throughout this book. It will also look at fund managers’ increasing focus on sustainable investing – investing with the long-term good of wider society and the planet in mind, not just focusing on shorter-term financial interests. As the large sums of money that fund managers earn are more prominent in the popular imagination than what fund managers do, it is no small task for firms to demonstrate that they are focused on social and environmental issues.