Schroders is facing a battle to cling on to its £290m UK Growth investment trust mandate run by outgoing manager Richard Buxton, after his new employer Old Mutual expressed an interest in taking it over.
Old Mutual Global Investors (OMGI), which has stunned the industry by poaching Mr Buxton and two colleagues, does not run any investment trusts currently but the firm has told Investment Adviser it would expect to be given the opportunity to pitch its services to the UK Growth trust’s board.
“We regard investment trusts as a strategically important investment vehicle for the UK market,” a spokesperson added.
The UK Growth trust’s chairman Alan Clifton has said the board has been very satisfied with Mr Buxton’s performance since he took over the trust in December 2002.
“The board is alert to its responsibilities to shareholders and to find the best possible team to replace Richard Buxton,” he said.
“Some have suggested they would like Mr Buxton to continue albeit in a new home, and we can take on board that point of view. He has performed very well – we are genuinely pleased.”
Schroders has already suffered outflows of roughly £400m on Mr Buxton’s flagship multi-billion pound UK Alpha Plus open-ended fund, according to FE Analytics estimates.
Experts have predicted that more investors will opt to re-invest with Mr Buxton when he joins OMGI in June, as they follow his unique bullish investment approach.
However, Schroders has made moves to stem the outflows. Last week it revealed it had hired Jupiter star Philip Matthews to replace Mr Buxton on the UK Alpha Plus fund.
Mr Matthews’s Jupiter Growth & Income fund has delivered a top-decile 60.1 per cent gain in the past five years, according to Morningstar – higher than Mr Buxton’s 45 per cent return on UK Alpha Plus.
Schroders has also poached Neptune’s Alex Breese, a protégé of Robin Geffen, to help replace its other outgoing UK equity managers Errol Francis and Ed Meier.
In a separate move Schroders has recently revealed it is set to buy Cazenove Capital. This will see it assimilate the group’s top-performing UK equity team, including growth star Julie Dean, as another alternative to the outgoing Mr Buxton.
David Coombs, head of multi-asset at Rathbone Unit Trust Management – which is the UK Growth trust’s third-largest investor – said he had contacted the board and was following its manager selection closely.
“We want the board to give someone else the opportunity to look at the mandate, absolutely,” Mr Coombs said. “It’s important for the board to assume independence – not just accept who they [Schroders] put forward.”
Backing Buxton
Ben Yearsley, head of investment research, Charles Stanley Direct:
”Putting Philip Matthews and Alex Breese together in a team is a gamble from Schroders’ point of view. If I was on the board of the investment trust and Schroders was gambling, then I would be a bit nervous and potentially look to follow Richard Buxton to Old Mutual.”
