After 35 years of stockbroking for some of the biggest houses and investors in Australia and the UK, the Secret Broker is regaling Stockhead readers with his colourful war stories — from the trading floor to the dealer’s desk.


There has been a lot of talk about Macquarie Bank this week and how they have become Australia’s ‘fifth bank’.

So, that is five banks split between 25m people, compared to America’s 4,800 banks split between 331m people.

That is why they have so many guns. They have over 77,000 branches in the US to hold up.

We had an old saying ‘why rob a bank, when you can hold shares in them?’ when recommending them to clients.

That’s why Australia has so few guns.

It’s the shareholders doing all the thieving, whilst all the hard-up robbers do very well on the dole. They don’t even need to get out of bed to warm up the getaway car anymore to collect their ill-gotten gains.

They’re living the dream. The Australian dream.

So what does M&G stand for? (I’m assuming you read the headline.)

This question came to me this week, after a small headline in the AFR stated that Macquarie Bank may be about to make a bid for one of my oldest and biggest clients, M&G PLC, who were originally called Municipal & General Savings.

“Municipal & General”. How British is that!

The MG in the MG Car Company incidentally stands for Morris Garages and we had another saying for them. It was based on the fact that MGs only needed a heated rear window to keep your hands warm when pushing them to your local garage after they broke down in winter.

Even the convertible version had real glass in its hood and that was the only bit that didn’t leak.

British engineering at its best… but back to the story.

So, Macquarie Bank has over $12bn in its very own cash management account and according to the headline, they could use A$9.8bn of it buying up M&G.

Now I know not many Australians would know who M&G were, but in UK investment circles, they would be like how AMP is over here.

They were the first institutions that allowed the public to co-invest into their investments (General) and not just pension funds (Municipal).

In 1931 they launched (and please be standing for this one), a very stiffly upper lipped named unit trust. They launched the ‘First British Fixed Trust’.

The First British Fixed Trust consisted of 24 companies which remained the exact same companies for the 20-year life of the trust.

After the 20 years were up it was broken up and all of the cash was then distributed back out to the unit holders.

Double bubble

One of my first jobs in broking was looking up Unit Trust prices, which companies like M&G would publish every day in the back section of the Financial Times, and I would then add those prices to clients’ valuations.

This act of looking up unit prices may seem to you like a very safe one. However, I have to tell you that in a rival broking firm, another bod doing the exact same job as me was sacked.

His pompous Senior Partner had walked past him and fired him on the spot for reading the paper and not working. He was later reinstated but even so, I had to work with one eye looking up prices and the other eye looking over my shoulder.

So, in those pre-internet days, unlisted unit trusts would publish prices based around the trust’s daily valuation.

The quote would be the trust’s NTA (Net Tangible Assets) as the bid price and the offer price would be the same NTA price plus 5%.

£1.00 bid (NTA). £1.05 offered (NTA+5%).

That way a seller would be getting out at no discount (to the NTA) and the buyers’ added 5% was the fund manager’s (M&G) commission.

Out of that added 5%, a fund manager like M&G would rebate us 3% as our commission. Standard commission rates at this time were 1.5%, so we would get double. Lovely jubbly.

Being unlisted meant that the unit prices never traded at a discount to their NTA, unlike Listed Investment Trusts (LITs), who 90% of the time trade at a discount.

Later in my broking life, I would be part of the team that would buy up listed unit trusts at a discount to their NTA, take them private and then liquidate all of their holdings.

Forget about 5%, we could net 15% plus.

The fund managers running these listed unit trusts didn’t like us doing this, as they lost the management fee income that they charged.

Information superhighway robbery

Fast forward to 2023 and we now have ETFs (Exchange Traded Funds) to solve the trading at a discount problem.

However, insider trading in ETFs seems rife, as someone knows their NTA before their prices are adjusted. Robbers can go long or short ahead of their price adjustment.

No balaclava required.

M&G currently has £191bn of funds under its management, which is what the millionaires factory are after.

All those fees, plus M&G employ the UK’s highest paid fund manager Richard Woolnough. He earnt £17m in 2013 alone, so this would be another reason why Macquarie are interested.

Another millionaire to add to the trophy cabinet, though my tea leaves tell me a few Australian egos will get brewed up when settles in.

I want to be at No. 1 Martin Place, to open Dickie’s car door when he arrives, as I understand he collects vintage motor cars and nothing like seeing the man from M&G in his MG.

I, of course, will also have some old rags to mop up the oil leaks and be on standby, ready to push his car to one side, so all the Rollers and Porsches can get past to park up.

Leave your mark, British (Leyland) style – as my Father would say to me.

He was a Triumph man and therefore, as a family, we left our mark wherever we went!


The Secret Broker can be found on Twitter here @SecretBrokerAU or on email at [email protected].

Feel free to contact him with your best stock tips and ideas.