I noticed the BBC had Nicola “Superwoman” Horlick on this morning, explaining why one of the hedge funds her company manages had assets worth $20.9 million invested with the alleged fraudulent hedge fund run by Bernard Madoff. Bramdean, whose shares crashed 23.75p to 42.75p on the news, said that the sums tied up with Mr Madoff represented 9.5 per cent of its assets. I was entertained by Horlick’s line that in the worst case scenario, if everything is lost on this fund, investors will be only down 4%. Happy days, eh? So why did the BBC have her on in the first place given its hatred of capitalism? I suggest that it is because Nicola merrily went on to divert attention from her own company’s pooor judgement in this investment by claiming that the crisis was caused by poor regulation in the States. This fits into the ongoing BBC/Brown narrative that everything bad starts on the other side of the Atlantic. If all else fails, as it look it has in the Madoff situation, just blame Bush!

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  1. frankos says:

    Perpetuating the myth that the FSA set up by Brown was and is a good regulator of British financial institutions .
    This contrasts with the financial industries contempt of their weak masters.
    The final conclusion (the BBC hopes) is that people will go running to the government to sort out all their problems inc mortagage arrears, financial problems,marriage spats, choice of what clothes to wear out on a Friday night etc etc.
    Welcome to Browns Super Nanny State where your every move and thought is monitored, and of course all your money is theirs. This is not so far off unless we do something about it!!!


  2. ipreferred says:

    Hm, again this looks like a morning of non-stories. You’re confused as to why this interview doesn’t fit into your view of the BBC’s bias, so you invent some convoluted reason?

    You also seem to have something against the woman. Her fund has made a mistake and her investors will lose out. But then, the guy who perpetrated this is surely the one to blame? You wouldn’t shout at a run-of-the-mill saver if their bank got robbed.


  3. mailman says:

    RBS has £400mil worth of exposure.

    Honestly, its like watching a loony toon cartoon! 🙂



  4. Scott says:

    ipreferred: ” You’re confused as to why this interview doesn’t fit into your view of the BBC’s bias, so you invent some convoluted reason?”

    And you’re surprised by this? It’s Vance’s everyday MO, surely.


  5. will says:

    ipreferred:”You wouldn’t shout at a run-of-the-mill saver if their bank got robbed.”

    So very highly paid fund managers are not like greedy bankers at all, they are just ignorant punters like us.

    I liked the way that Evan Davies agreed with her that she had performed admirably for her investors.


  6. Anonymous says:

    This is not so much about bias, but further confirmation that socialist beeboids are utterly clueless about matters economic.

    If they did they would be telling users not to touch with a bargepole those actively managed funds such as those run by Horlick et al.

    It’s not only a case of Horlick exercising pisspoor financial judgement and trying to divert blame on the Americans, but it is a known fact that 80-90% OF ALL ACTIVELY MANAGED FUNDS return less per year to their investors than the stock market in general:

    In other words, if someone simply bought into a low-cost index fund that simply piggybacks the FTSE-100 or S&P 500 or whatever, sat back and did nothing else, they would have earned far juicier returns than the vast majority of fund managers, with their constant buying, selling and huge fees.

    But then again, if everybody did that then the likes of Horlick would go broke, and that would be such a shame…


  7. Andy says:

    Anonymous | 15.12.08 – 10:09 am | #

    Sorry forgot to put my name in…


  8. ipreferred says:

    will: I don’t think you can generalise about hedge fund managers at all. Some are greedy, some are cautious, and the cautious ones are suffering monetarily and at the hands of a baying public. Being highly paid doesn’t make you any more guilty when things go wrong – would you damn a surgeon whose patient died during emergency surgery? Only if there was good evidence it was directly their fault.


  9. Andy says:


    You can certainly generalize about their performance in that the vast majority of them underperform when compared to the market in general.

    Think about it. How can the market beat itself? You can only match the market in the long run (10-20 years). Subtract the 1.5 – 3% (sometimes more, sometime extra upfront) fees then it becomes impossible to beat that of passive index investing whose fees are typically 0.2 to 0.7%.

    Any fund manager that claims otherwise is lying.


  10. will says:

    ipreferred | 15.12.08 – 10:11 am

    So you accept without question that (irrespective of the actions of others) Horlick couldn’t be expected to spot a pyramid scheme? Are you not cutting her more slack than you would a foolish householder filling their house with cleaning materials under a previous, more low key scam of this type?


  11. Andy says:

    I’ve yet to see ANY evidence of an actively managed fund run by the same person that has performed consistently well over at least 10-20 years, which is what really matters.

    Certainly you will see many funds showing graphs shooting into the stratoshpere over 1-3 year periods, but these are simply due to rising tides where any idiot could make money.


  12. Tom says:


    You are talking through your backside. Anyone investing in a tracker fund in this falling market would have seen the value of their investments go down by between 15 and 30 per cent in recent months.

    By contrast Horlick’s main fund has broadly kept its value in a falling market. How? Partly because it can take short positions. Partly also because half its money is in private equity funds. And because it can use hedge funds for what they were invented for – hedging.

    David Vance

    I think it is stretching things to the limit to see any BBC bias here.
    Nicola H’s explosion of rage has been covered in all financial media and in the Daily Telegraph. Anyway, her criticisms of US regulators are surely fair enough. This guy Madoff has been running a Ponzi scheme and no-one noticed?

    As for saying Horlick made an error of judgment – how so? What about Madoff should have alerted her?

    Besides, as she says, it hardly makes a difference. What’s a 4% drop when your fund activities can result in gains of 45%? The net asset value of Horlick’s main fund went up by more than 4% in the month of October alone.


  13. frankos says:

    The point is that the BBC always leap on any financial problems in the private sector with a great deal more relish than the huge ineffeciencies and scandalous fraud committed in the public sector.
    The general BBC tone is that mass nationalisation could possibly be a solution to all this private sector greed.
    The BBC insidious question is always; could Brown’s government run all the private sector commitments and companies of this country better than the private sector owners?


  14. Sarah Jane says:

    This clearly a case of the US regulator not spotting a Ponzi scheme, despite investigating the fund on several occasions and that’s all there is to it, and the reporting of it.


  15. Tom says:


    “Anyone investing in a tracker fund in this falling market would have seen the value of their investments go down by between 15 and 30 per cent in recent months.”

    Yeeees! As Tom (Jones) might say it’s not unusual. Markets wiggle, they typically rise or fall by the amounts you stated. In the same breath and with a (presumably) straight face you talk in timescales of months! LOL! so verily it is you that doth talk through his sphincter.

    Given that this seems to be the extent of your knowledge you’ll get no more comments from me.

    Dig a little more closely and look at Horlick’s long term performance , subtract her not inconsiderable fees, and you will discover that any rational investor would have been far better off investing passively.

    Better still, sink your cash into equities right now while shares in solid compaines are at bargain bin prices. There is nothing an active fund manager could do that an ordinary investor could not achieve himself at a far lower price.


  16. Chuffer says:

    Horlick has always been a BBC figure of worship. Something to do with having five children and letting others bring them up.


  17. Andy says:

    Oops. Such are the dangers of copying and pasting…


  18. Tom says:


    (I take it it was you posting as me…..)

    subtract her not inconsiderable fees

    Her fees are the usual 1.5%.

    She only charges a performance related bonus once the return to the investor is over 8% pa.

    Seems fair enough.


  19. Andy says:


    “Seems fair enough”

    10% for returns over 8%!!!

    Click to access UK_Private_Fact_Sheet.pdf

    Pheeew! Like I keep trying to explain with little success, you would have been way better off doing it yourself, rather let fees like these eat into your returns…


  20. Andy says:

    Like I said, passive index fund charges are typically 0.1% (Fidelity Moneybuilder UK Index) to 0.53% (Legal and General UK All-Share) and that’s it! Nothing else!

    Over the long term (15-20 years) charges like hers translate into huge sums of money…


  21. Tom says:

    Although the BBC is generally hostile to the private sector, there was an encouraging exchange on the Toady programme between Evan Davis and the public sector union leader, Mark Serwotka.

    The union bod was moaning that salaries in the public sector were too low. Evan D then sprang the killer question:

    “If it is so bad in the public sector then why don’t you cheer when the government says it is, perhaps, going to privatise the Post Office or to put workers in the private sector? You should be saying great this is our chance to earn a bit more. But I never feel that the public sector unions do cheer when the government says it will put things into the private sector.”

    Now there’s light at the end of the tunnel.

    Anyone see the story in the papers saying Ed Stourton has been fired to make way for…….. Justin Webb?


  22. Tom says:

    oops, silly me. It’s got its own thread!


  23. DB says:

    I’m pretty sure that if Madoff had been a regular donor to the Republican Party we’d have heard it mentioned more than once on the BBC. But he wasn’t.


  24. DEJ says:

    Tim Worstall says Madoff’s fund was not a hedge fund.


  25. Cockney says:

    Surely a really super woman should have said to herself “hang on a minute, US fund regulation is pretty sketchy, there’s a strong risk that this guy’s investment strategy isn’t all it seems so I’m not gonna put 9% OF MY ENTIRE FUND in the thing…”. If she just looked at the top rate return then that’s not a massively sophisticated investment strategy as far as I can see and it’s a bit rich to start whingeing about it now. And if the Beeboid didn’t point this out then I’m with David on this.


  26. Cockney says:

    Re: hedge funds generally it’s ridiculous to claim that they “can’t beat the market”. Of course you can beat the market if you’re not investing in all of it and you’re intelligent/lucky enough to pick the best performing bits or bet against the basket cases. The whole point of a hedge fund is that its a high risk investment with high management fees – if you don’t fancy this don’t invest. Personally I don’t think that its an appropriate investment for pension funds, councils etc whose assets are managed by 12 year old graduate trainees who don’t know shit but a high wealth private investor is grown up enough to make his own errors.

    The only regulation it needs is an appropriate health warning on the wrapper and enough safeguards to make sure that funds aren’t manipulating the wider market to their own ends.


  27. AndrewSouthLondon says:

    Am I the only one who thinks its daft to invest in hedges? Box and privet tend to grow fairly slowly and need regular maintenance. Investing £50bn in topiary rings alarm bells with me.

    I’m no economist but it seems to me these funds are also have a pretty poisonous effect on our lives – stoking up the price of oil and commodities, betting against currencies. I’ll wager the crash in the pound against the Euro has scum like Sorros in there. They do it on margin so its not even real money – its pure gambling.

    So why should we admire Horlick? She’s a spiv with five brats. She may be in there betting the pound down further and helping it do so. I think Beeb love her as shes a just an ordinary working supermum.


  28. Gog. says:


    I think you confuse speculating with investing. Hedge funds, even if really carefully selected by experts, cannot return more to investors long term than say the market index. This is simply because the fees commanded by hedge fund managers are so complicated and costly, no matter how sophisticated their methods are…

    A hedge fund typically charges a 1.5% annual management fee. On top of the management fee, hedge funds typically collect 20% of any gains they make, leaving 80% for the investor.

    The upshot is that only ~78.5% at most of the annual return made on an investor’s money accrues to him, the rmainder going to the “helpers” .

    For the hedge fund to win, the funds chosen must do much, much better than the market as whole. Maybe short term they will, but in all liklihood the end result will be disappointment.


  29. Cockney says:

    I fully appreciate that charging 2 and 20 for management means that hedge funds have to significantly outstrip the market in order for them to make a return in excess of what you’d achieve from a more prudent investment, but the regulatory regime (or lack of) surrounding them means that they’re uniquely placed to do so.

    I’m not saying they’re necessarily a great investment and they should certainly be avoided like the plague by anyone who doesn’t understand the intricacies of the way a particular fund invests and the risks involved (i.e. those investing public sector funds…) but to say they “cannot return more to investors long term than say the market index” is manifestly wrong. It depends on how good the management is.

    If the shorting ban is the thin end of the wedge and governments impose blanket regulation then obviously hedge funds and their pricing structure will disappear as there will be nothing to differenciate them from any other common or garden investment vehicle.


  30. cjcjc says:

    A moment’s googling will reveal that several hedge fund researchers had big doubts about Madoff.

    Horlick’s lack of prudence (10% exposure to one manager is too high) and lack of due diligence are highly remiss.

    What should have alerted her?
    The lack of volatility in Madoff’s record.


  31. Tom says:

    Gog. | 15.12.08 – 1:27 pm

    Horlick’s fund is about 50% invested in private equity which historically have tended to treble an investors’ money quite quickly.

    On a more direct annual comparison – PE funds have tended in recent years to return 18.7 per cent net of fees and costs, compared with the [average] 7.3 per cent returned by the FTSE-100 index over the 10 years December 1996-2006.

    I’m a satisfied customer of NH – she’s made us a lot of money both at Bramdean and in her previous incarnation and I’d rate her advice higher than that of the various tipsters on this thread!


  32. David Preiser says:

    This is a legitimate story for the BBC to report. The only questions seem to be whether or not Evan Davis should have patted Ms. Horlick on the back for being prudent enough not to have lost everything, and whether or not this is being used as fodder for the BBC Narrative that Britain’s current economic problems are due only to nasty, greedy US bankers and the deregulation by nasty Republicans and Boooosh.

    Clearly a prudent fund manager would have started to get their money out of Madoff’s fund when his charitable contributions dropped from over $1 million down to something like $95,000 this year. That was a red flag that alerted people to Alberto Vilar’s money problems, and should have been here. Easy for me to say, I know. But if I had millions invested in someone who made a big deal about his charity cash, that’s something I’d be paying attention to. Did Davis bring that up?

    I suppose it’s fair to say that hedge funds wouldn’t exist if we had really strict regulations. But what does that have to do with a Ponzi scheme? That kind of fraud can’t be prevented by any kind of regulation.


  33. Gog says:

    “PE funds have tended in recent years to return 18.7 per cent net of fees and costs”

    This is meaningless, given that stock markets (and hence PE funds) can swing by these percentages – and more – in 6 months/1 year/3 years. What matters is performance over 10-20 years. What you are saying is that stock market experts could beat themselves – a contradiction.

    Any investment different from an index will get different returns. The comparison of any active manager to any index is inappropriate, due to style drift.

    The performance of private equity funds is notoriously difficult to track, as opposed to the stock market, as PE firms are not obliged to publicly reveal the returns from their investments.

    It is true that some professionals do beat the market, but it is a different group that seem to do so each year. There seem to be zero consistency.

    Why pay people to gamble with your money?

    “Question: So investors shouldn’t delude themselves about beating the market? Answer: “They’re just not going to do it. It’s just not going to happen.”

    Daniel Kahneman, Nobel Laureate in Economics, 2002

    “any pension fund manager who doesn’t have the vast majority—and I mean 70% or 80% of his or her portfolio—in passive investments is guilty of malfeasance, nonfeasance or some other kind of bad feasance! ”

    Peter Tanous, Nobel Laureate in Economics, 1990

    “It’s like giving up a belief in Santa Claus. Even though you know Santa Claus doesn’t exist, you kind of cling to that belief. I’m not saying that this is a scam. They generally believe they can do it. The evidence is, however, that they can’t. ”

    Professor Burton Malkiel: – ABC News Program, November, 1992

    “If I have noticed anything over these 60 years on Wall Street, it is that people do not succeed in forecasting what’s going to happen to the stock market.”

    Benjamin Graham, Legendary investor and co-author of the 1934 classic, Security Analysis

    “Contrary to their often articulated goal of outperforming the market averages, investment managers are not beating the market; the market is beating them.”

    Charles D. Ellis, “The Loser’s Game,” Financial Analysts Journal, (July-Aug 1975)

    “much as you may wish you could know which funds will be hot, you can’t – and neither can the legions of advisers and publications that claim they can. Building a portfolio around index funds isn’t settling for average. It’s refusing to believe in magic.”

    Bethany McLean, “The Skeptic’s Guide to Mutual Funds,” Fortune Magazine, March 15, 1999


  34. I’ll wager the crash in the pound against the Euro has scum like Sorros in there.
    AndrewSouthLondon | Homepage | 15.12.08 – 12:52 pm |

    No, Andrew. There is scum involved but it’s Blair/Brown who engineered the ruin of our currency and the economy on which it is based.


  35. TPO says:

    Britain faces worst recession in history, Cabinet minister Tessa Jowell admits.
    The British economy is facing the worst recession in its history, Tessa Jowell has admitted.
    Tessa Jowell, the Olympics Minister, said the forthcoming downturn was expected to be “deeper than any that we have known”.
    The admission is the most pessimistic forecast so far issued by a Government minister. It raises the spectre of a recession lasting throughout 2009 and part of 2010 – worse than the recessions of the early 1990s and 1980s.

    Where did the incredibly stupid Jowell (remember she didn’t know who paid her mortgage) say this? On the BBC2’s The Daily Politics show

    How come the Telegraph have covered the first admission by this corrupt government that It’s a disaster, but the BBC, where Jowell made her admission, cannot.
    The usual bias by omission, until they’ve received instruction on what the party line will be.


  36. will says:

    BBC News Channel have been continuing to air Horlick’s criticism of US regulators all day. Sure they are culpable, but Horlick is allowed to behave as if she had no duty of care when investing £millions.


  37. TPO says:

    This clearly a case of the US regulator not spotting a Ponzi scheme, despite investigating the fund on several occasions and that’s all there is to it, and the reporting of it.
    Sarah Jane | 15.12.08 – 10:52 am |

    In a few years time, when all the dust has settled, I think people (BBC excepted – if they even exist then) will point to Brown & Co and say that they ran the largest Ponzi scam ever.


  38. knacker says:

    Madoff’s entire compliance, practice and audit operation reportedly fit into a single 18 x 14′ room, plus loo. An outfit running 50 billion would normally have a couple of hundred people working on reg/audit stuff full time.

    One wonders how Nicola missed that during her ‘due diligence’. Surely she didn’t just punt, relying on the competence of others? Nah, couldn’t be.

    For context, the BBC might have wondered where the British regulators were for NRock, Abbey, A&L. B&B, RBS, and Uncle Tom Cobbley.

    Or they might have recalled that just over a year ago the party line was that staid, over-regulated New York was losing out to bold, innovative London’s exciting and benignly regulated new issues market.

    Lotsa grade-D Russian IPOs seems to be the main result. Plus the standard bucket of shit from MinTruth. You are being played for fools, again.


  39. Sarah Jane says:

    TPO – very possibly

    Cockney – didnt hear the item DV is referring to, but this is the lead story on at the moment and this is from it:

    “However, some argued that the fund managers should themselves have done more.

    “City figures cannot call for light touch regulation yet at the same time complain that regulators missed risks that the industry failed to spot,” said Simon Morris, a partner with City law firm CMS Cameron McKenna.

    “It’s the unequivocal job of the fund manager to check out the bona fides of whoever they chose to pass their customers’ money onto,” he said. ”

    David – this is/was a ‘Ponzi scheme’ masquerading as a legit fund – definitely one for the regulators. Mind you the guys was head of NASDAQ – the clues are there 😉


  40. TPO says:

    Still nothing on the BBC about Jowell’s admission of labour guilt over the economic disaster.

    So the party line is say nothing.
    True to BBC form and in their parlance, they want to ‘close down the debate’.

    Much like when one of them coughed to ‘closing down the debate’ over the idiotic Rowan Williams comments on sharia courts and much like some BBC labour party apparatchik who said that the criminal scandals surrounding Ken Livingstone and Lee Jasper were ‘not newsworthy’.

    Can anybody take the BBC output at face value any more.


  41. adam says:

    Good one TPO
    Another Labour minister trying o destroy the pound meanwhile Osborne has to shut his face


  42. Sonny says:


    Hmmm dunno, but what really gets to me is the way she tries to deflect responsibility by playing the ‘because I’m a woman’ card:

    “If I wasn’t a woman would all this rubbish be printed about me”

    “The fact that this man ran off with the money is hardly my fault.”

    Not the kind of thing her investors will want to hear…


  43. TPO says:

    Guido runs with the Jowell woman’s confession.

    ‘Tessa Jowell went wildly off message yesterday and said that Britain is facing a recession “deeper than any that we have known”. Another significant admission from Chancellor Darling suggests we are perhaps not best placed to weather the global financial turbulence’

    So after hours of agonising at BBC/Labour, the party message is published as follows:

    Tories attack economy ‘admission’

    What’s with the ‘admission’ bit. She said it, there’s no ‘ ‘ about it. Why not run with a headline that states “Government Minister admits economy in crisis” which is exactly what this idiotic bimbo coughed to. The BBC/Labour vermin go on to quote the indescribably stupid Jowell “This is the politics of the playground,” she said.

    Good grief, any other party and the BBC would have gone into a feeding frenzy.

    Time to wind up this party political broadcast system for the socialists.


  44. Zevilyn says:

    This will happen again and again because by bailing out Wall Street and the City Bush and Brown have effectively rewarded incompetence. Incredibly, no strings attached to these welfare handouts to the rich. Better to let Wall Street and the City fall and flush out the incompetents, to be replaced by more competent successors.

    In the US, Henry Paulson is stealing taxpayers money and giving it to his rich friends, while unelected, mentally retarded Ben Bernanke destroys the dollar.

    While we lose our jobs, the welfare spongers in Wall Street and the City will continue to steal our money.


  45. frankos says:

    You seem to forget that most city institutions have been good investors of our money over the long term .
    You can’t label all city institutions as corrupt just because certain mavericks have caused mayhem.
    Sure, let all the banks fall and stick your savings under the bed or bail them out and root out the offenders + punish them in due course.
    Normally I would advocate that there should be no corporate bailouts, but banks have us by the nuts.
    Bide your time and keep your powder dry and we will punish all the offenders given the right banking regulators–independent and not politically motivated. ie the BoE


  46. Junior Sub says:

    Sonny | 15.12.08 – 9:55 pm

    what really gets to me is the way she tries to deflect responsibility by playing the ‘because I’m a woman’ card

    Actually, she has a point. If the Royal Bank of Scotland lost £600m with Madoff, Santander £2.1 billion, etc. – then why was the twopence-halfpenny lost by Miss Horlicks the headline?

    The key difference is…. lipstick. (winks)


  47. Cockney says:

    “While we lose our jobs, the welfare spongers in Wall Street and the City will continue to steal our money.”

    I half agree re: the bailout but in the UK at least the City has been generating pretty much all of the growth in the economy for years. As a City worker it annoys the hell out of me hearing workshy incompetents in the regions slagging us off in between coffee breaks / holiday / maternity leave / religious festivals etc etc etc. Unfortunately Britain seems to be stuck in a mentality of wanting US wages with a European work/life balance and it’s us poor sods in the square mile who’ve been bailing everyone else out for very little thanks.

    In the US there’s a lot more in the way of genuinely productive manufacturing industry etc and at least a bit of a work ethic.


  48. will says:

    “why was the twopence-halfpenny lost by Miss Horlicks the headline?”

    Because she sought the publicity, making herself known & available, before dawn, to the Today programme. She wanted to get her absolution in early.


  49. Sarah Jane says:

    Cockney – do you still think it was ‘growth’? Real added-value?

    Or was it just a lot of moving it around?

    Let’s not continue the delusion any longer…

    The point about US wages/Euro hours is a fair one though.

    It reminds me of senior managers who want private sector wages in low risk publicly-funded jobs…