Hires and fires shift to EM, property and bonds

Mr Buxton’s move to Old Mutual Global Investors is the latest in a raft of manager moves seen in recent years. Manager moves like this, however, are a good indicator of how investment houses are looking to position themselves in the marketplace.

Two years ago the fund manager merry-go-round was focused on multi-manager and multi-asset specialists. Now, however, the hiring patterns appear to favour emerging markets – both debt and equity – as well as property and fixed income.

Fraser Donaldson, insight analyst for funds at Defaqto, says: “It was almost as though each company was setting themselves up for the future and realising that multi-manager was the place to be.”

One of the biggest changes in the multi-asset space was the move by three members of the Standard Life Investments Global Absolute Return Strategies team to Invesco Perpetual in September 2012.

Reflecting the increasing overlap between multi-asset and fixed-interest strategies is Jupiter’s recent appointment of Miles Geldard as head of its combined fixed-interest and multi-asset team.

Fixed-income appointments have been flowing thick and fast in 2012 and into 2013, in spite of concerns the bond bubble may be about to burst, or perhaps because of this. Legal & General Investment Management, Scottish Widows Investment Partnership (Swip), Kames Capital and Liontrust have all strengthened their fixed-income teams.

Property too has become a growing area, with Swip and Kames among those boosting their property teams, with Kames restructuring its property unit following several new arrivals.

Meanwhile, emerging markets continue to be a hotspot for manager moves and developments, with Schroders, Threadneedle, Ignis and Mirabaud among those hiring or creating new teams. The problem with the large amount of manager moves is whether the performance of a fund is based on one manager or a team process.

Professor Andrew Clare, who specialises in asset management at Cass Business School, notes that research has shown when a manager moves it can have a big impact on the performance of a fund.

“When a manager who has been outperforming for a few years prior to leaving then leaves, the performance of that fund [reflects] more or less benchmark-type returns from that point onwards for a couple of years,” he says.

“At the other end of the scale, when a poorly performing manager leaves, if they have underperformed for a couple of years, poor performance doesn’t exactly stop but the deterioration is not quite as rapid.

“But it is quite hard for investors to follow, partly because some managers sell their asset management teams as just that, as teams. Some teams genuinely are teams and the loss of one player might not be quite so significant, while I think other teams are nothing of the kind.”

Ben Willis, head of research and investment manager at Whitechurch Securities, adds that manager changes can provide a headache, especially with roughly 50 per cent of managers not having a three-year track record.

“A fund is immediately reviewed if there is a fund management change. However, this is not automatically a sell. On many occasions, we are prepared to interview and question the new management and provide them a period of grace in which to monitor the fund.”

With markets expected to remain volatile in the foreseeable future, investment houses will try to attract talent in areas where they are either missing or want to grow. The key thing for advisers is to decide whether it is the manager that is the most attractive aspect of a fund or its investment strategy.

Nyree Stewart is deputy features editor at Investment Adviser

MANAGER MOVES IN THE PAST YEAR

February 2012 – Henderson announces Mitesh Sheth is moving to a ‘broader strategic role’ as director of business innovation, with Jim Irvine taking over his role as head of Henderson’s £16bn fixed income business. Colin Fleury, previously head of asset backed securities, took over the management of the secured credit business from Mr Irvine.

July 2012 - Roland Arnold is appointed co-manager of the BlackRock UK Special Situations fund alongside existing manager Richard Plackett, with effect from 1 August 2012. Mr Arnold has already been assisting on the fund for the past two years with BlackRock stating the appointment was recognition of the current process and the strong conviction in him as an investor. Mr Plackett remains the lead manager with ‘ultimate discretion’ for the portfolio.

August 2012 - Investec Asset Management’s star manager Alastair Mundy and his team is given responsibility for the Investec American fund after it is taken in-house. Previous sub-advisers Thornburg Investment Management had run the fund since 2002 but consistent underperformance led to Investec removing the mandate from them. The company notes the size of Mr Mundy’s team, roughly 10 people, meant the manager would be able to comfortably run the American fund alongside his existing Cautious Managed and UK Special Situations fund.

September 2012 – Alex Wright takes over the management of the Fidelity Special Values investment trust from Sanjeev Shah. The board of the investment trust announced the change in the summer, noting the manager change reflected “the wish of the Board to use more fully the flexibility afforded to it with its current investment strategy, including being able to invest a greater proportion of the portfolio in smaller and mid-cap stocks, and allows the company’s current portfolio manager, Sanjeev Shah, to focus solely on managing the open-ended Fidelity Special Situations Fund in accordance with his wishes”.

December 2012 – Tineke Frikkee is replaced by Richard Wilmot as the manager of the Newton Higher Income fund as the company unveiled changes to its investment offering. Newton highlighted some changes to the running of the fund under the new manager including broadening the buy and sell discipline of the fund and plans to progressively reduce the fund’s yield in the next 18 months.

February 2013 – Ben Russon, manager of the £422.4m Newton UK Opportunities fund, leaves the company for Franklin Templeton. Paul Stephany takes over his role at Newton as Mr Russon will join his new company in April as co-manager on the Franklin UK Select Growth fund, with the intention of becoming lead manager following a period of transition, and as co-manager on the Franklin UK Managers Focus fund.

March 2013 - Richard Buxton quits Schroders to take up the head of UK equities role at Old Mutual Global Investors. Erol Francis also resigned from Schroders on the same day to move to Old Mutual Global Investors.

THE COMPANIES INVOLVED IN OVERHAULS

Scottish Widows Investment Partnership

The past year has seen Edinburgh fund giant Scottish Widows Investment Partnership (Swip) revamp both its investment offering and its equity team. In April it announced the equity offerings would have more focus on global and specialist active equities and quantitative equities, while the real estate, fixed income and multi-asset investment divisions would also be fundamental to growth in the future.

As part of the revamp the company acknowledged it would lose 23 roles, mainly through natural turnover, although while it has announced a number of people leaving it has also hired in talent to boost its property and fixed income offerings.

In January, before the refocusing of its strategy, Swip announced the appointment of Geoff Hepburn from Hartwell as investment manager in the 50-strong real estate team, along with six internal promotions in the division for both international and UK real estate.

The equity overhaul in April resulted in Andrew November, then director of equities at Swip, naming a senior team with Will Low remaining as head of global equities now encompassing UK small cap, real estate securities and absolute return, while Sean Phayre continues as head of the quantitative investments team. However under the new structure the role of head of UK equities was removed causing the departure of Peter Cockburn from the firm.

Almost four months later Mr Low took over the role of director of equities from Mr November, who has taken up the newly created position of investment propositions director that focuses on developing the Swip proposition for Lloyds Banking Group’s customers.

A spokesperson for Swip adds: “In April we announced our intention to reposition our £54bn equities business. As you can imagine this involved the transition of a number of equity funds to the new strategy and subsequently fund manager changes.”

Meanwhile the property team saw a further change in the past year, with Malcolm Naish retiring as director of real estate in June, with his replacement Lynda Shillaw taking on the role in October from Lloyds Banking Group. .

Fixed income, however, has seen a continued boost in terms of hires, including Alan Bridges as investment director for UK rates in August, and Calum Smith as head of global aggregate in the fixed income team in September.

Further support for the division has included the appointment of Neil Tong, formerly UK equity fund manager and desk head at Alliance Trust, as a senior credit research analyst within the fixed income team.

But Swip’s overhaul is not just focusing on the UK, with the company announcing in October the appointment of three investment grade credit analysts for its US-based fixed income team. It stated at the time that it wants to grow the fixed income assets it manages from its US office with the expectation of managing roughly $2.5bn (£1.6bn) in US investment grade assets in the next 12 months.

Royal London Asset Management

In the first quarter of 2013 Royal London Asset Management (Rlam) has brought about the departure of three fund managers, including head of equities Jane Coffey.

It was revealed by Investment Adviser in February that Ms Coffey had left the group after 11 years, as the head of equities role no longer existed following a decision by Rlam to refocus its active equity efforts on areas in which it believes it is more competitive.

Edward Chan, manager of the Royal London Far East fund, and Jonathan McClure, manager of the Japan Growth fund, have also left as both vehicles are switching to a passive management approach.

Rlam stresses it “remains fully committed to managing active equity funds, but ensuring we focus our efforts on those areas where we have a competitive advantage”.

This effectively means a focus on its pan-European active equity funds and its range of UK equity vehicles, with Ms Coffey’s UK Equity fund now being run by Ivor Pether.

A spokesperson for Rlam explains: “We just felt we were not in a position to compete with the big players who have much greater resources in those areas [Far East and Japan] and a local presence, so essentially what we’ve done is transfer those assets to our existing passive equity team where we already run in excess of £7bn.”

Rlam adds the changes are not a question of the firm refocusing its equity strategy but instead ensuring “we have the right resources in the right areas and ensuring we concentrate our efforts on those areas where we can add value”.

The company says the changes are ‘tweaking’ the fund range and although it admits it was not a step they took lightly it was done in consultation with clients and says there is a demand for a passive offering.

However, it adds it has no current plans to further expand its passive team following the transfer of assets from the two Asian funds as it says the passive approach used by the team is scalable.