In an open letter shared on its LinkedIn, Blackwattle Investment Partners urged the fund management industry to recognize the inherent risks, conflicts and distractions created by in-person trading.

The letter, signed by managing director and chief investment officer (CIO) Michael Skinner, said: “Personal trading by fund managers is a conflict and a significant distraction.”

“It’s certainly not in the client’s best interest.” The practice must be abolished not only in fund management but also in investment banking, stock research and trading.”

Noting that people are "inherently selfish", Skinner said fund managers "can be tempted to prioritize personal gain over client interests" despite what regulators such as the Australian Securities and Investments Commission may to "hope and wish."

“Consider this scenario: suppose I personally invested significant amounts of my own wealth in a publicly listed company, say Qantas. Now imagine that company loses its CEO, the investment proposition changes, or it becomes overvalued. Would I recommend that the fund I answer to sell its investment, thereby potentially causing the share price to fall and resulting in my own financial loss?

"It's a moral and ethical dilemma."

Skinner goes on to argue that fund managers also tend to spend more time on personal trading than managing their assigned funds.

“Consider a reporting season scenario where multiple companies release their results and host calls at the same time. If I have a personal investment releasing results at the same time as a portfolio company, my attention will probably be diverted to my personal profit. This distraction can negatively impact portfolio performance and is clearly not in the best interests of the fund's investors,” he said.

Ultimately, he believes a ban on face-to-face trading should be introduced to simplify internal compliance and reduce the risk of compliance violations.

“At Blackwattle Investment Partners we have implemented a strict no personal trading policy. This policy emphasizes our commitment to always act in the best interests of our customers. We call on regulators, industry bodies and fellow fund managers to also ban the practice,” Skinner said.

"To our clients, from large pension funds to individual investors, we urge you to hold the industry accountable and reject the practice of personal trading by any and all fund managers."

Blackwattle Investment Partners officially launched in Australia in May last year with initial seed capital of up to $60 million and six years of funding.

Described as a "new generation, highly focused Australian investment manager", Skinner said at the time that Blackwattle was committed to attracting Australia's best investment talent.

“We've turned the traditional model on its head and de-risked the key person. We don't believe in a concentrated leadership style – everyone is a significant owner of capital and we are all partners together,” he said.

"We invest alongside our investors and clients, with personal capital committed and corporate profits reinvested in our portfolios, there is no personal trading."