Thank you for downloading this podcast from the BBC. In this edition of the bottom line, Evan Davis asks his guests if the right companies get the money they need to grow.

Hello and welcome to the programme. We have three guests from the investment business today to give us a quick guide to capitalism.

And we're going to talk about its most important role, which is taking capital

and feeding it to cash-hungry businesses to invest. And we're going to ask if it's doing that

job very well. Do good companies get the right amount of money, and how much capital is wasted

in getting it to them? But before any of that, let's spend a few minutes meeting each of my

three guests. And first up is Terry Smith, who's spend a few minutes meeting each of my three guests.

And first up is Terry Smith, who's chief executive of Tullet Prebond, one of the world's largest interdealer brokers. But Terry, you've got into the fund management business. You basically said the people who take our money and invest it on our behalf aren't doing particularly good job. Yes, that's right. I mean, if you you look back before I run Telit Preban, I was an equity analyst for a number of years. I developed systems for valuing companies and working out what's a good versus bad company and so on. And when I got Tullet, it had a big deficit on its pension fund. So I became the investment advisor and we turned that fund around. So it's based on that strategy basically. But it's a reasonably low cost fund. Because the truth is, if you put your money to an professionally run investment fund, you rack up a heck of a lot of fees. Most fund managers charge way too much. Most people really shouldn't go with an active fund manager at all. They should have an index fund and pay virtually nothing. So you're pitching yourself as the easy jet of fund management? I'm not sure that's exactly the analogy I had in mind, but I'll go with it, yes. How has it been doing, though? We're up about 21% in the last 18 months since we started. The market's up about 4% in that period, so we've outperformed the market quite a lot. We're charging a flat 1%, which is lower than most people,

and the reason it's 1% is even I can calculate 1% or something. But your investment strategy is not to tinker too much, because every time you tinker, you run up fees, and it's the fees that can you rather than the investment decision. There are two things to it. One is the actual management charges. You've got to have low management charges, otherwise you're giving up too much the gains.

The other thing is don't tinker

because you can easily double the costs

of running the fund. All right. Well, also with us, Israeli entrepreneur, Yossi Vadi, who's

invested in and helped to build, I think, 80 startups across Israel's high tech sector, been

described as the godfather of Israel's high-tech sector. Give us some examples of what

you've invested in. The successful ones or the unsuccessful? I have two very impressive lists.

Why don't we start with the successful one? Okay, the successful one, I think my most celebrated

investment, which I've done with no idea what I'm doing was ICQ, which we sold.

ICQ, that was very early messaging system.

It was actually the first internet-wide instant messaging.

And what happened to it?

It was sold to...

We sold it after 19 months with $30,000 revenues to AOL.

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