InvestmentsOct 14 2014

S&W’s Rosengarten to focus on core areas

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Smith & Williamson’s new fund business head, Ed Rosengarten, has said he hopes to push the group to greater prominence by being a specialist in core areas.

In his first interview since joining the group in May, Mr Rosengarten said he would not look to tackle more esoteric areas within asset classes, but would instead focus on running simple mandates he believed could sit at the core of many portfolios.

The former M&G Investments equities chief executive said he had dismissed the idea of launching something like a strategic bond fund, instead sticking to liquid holdings in investment-grade credit in his funds.

He also said the group would not play in the mid- and small-cap areas of the stockmarket, but instead specialise in producing returns from the upper end of the market.

“I am confident we will establish ourselves as a credible force within the asset management industry,” he said.

Since Mr Rosengarten joined, the group has hired bond manager John Anderson, who previously ran funds at JPMorgan Asset Management and was head of credit at Gartmore.

“John is a very good fit with what Smith & Williamson stands for in fixed income,” he said.

“He is conservative, has a safety-first approach and focuses on liquid investment-grade bonds. What we hope is that John will take his fund, which is £35m at present, and take it to key clients.

“There are plenty of strategic funds from houses like M&G and Invesco Perpetual, which are more complex and dynamic in construction and compliment what we do.”

Mr Rosengarten said fixed income was an area where investors were “increasingly look for liquidity and transparency” in bond portfolios.

“We took the decision not to push down the strategic bond route,” he said. “There are two elements we don’t do, which are sub-investment-grade credit and the other is derivatives.”

Mr Rosengarten said many of the funds had been developed for the group’s wealth management clients, but now he was focusing on making sure they were “fit for purpose” for external sale.

“They have been adequate and sufficient for internal clients but we need to think about them for an external audience,” he said. He added he would be also getting managers out on the road more in a bid to improve asset gathering.

The products which Mr Rosengarten is most focused on at present are the group’s UK funds, fixed income funds and its multi-asset proposition, but he is looking at other potential areas to promote, including European equities.

The group hired Tineke Frikkee from Newton, in June last year, and Mr Rosengarten said the manager was developing her track record on the UK Equity Income fund. He added the group’s long/short Enterprise fund was also performing strongly.

Its multi-asset model portfolios have also been pushed from a distribution point of view after a deal was recently struck with wrap platform Novia, and now Ascentric.

Mr Rosengarten said the reason these two platforms were chosen is because they list investment trusts and exchange traded funds, which feature in the model portfolios.

Elsewhere, fund of funds manager Nick Marshall was recently made redundant following a review of the firm’s fund offerings by Mr Rosengarten.

Mr Marshall had been a co-manager on the Smith & Williamson MM Endurance Balanced fund, with primary responsibility for researching open-ended funds, but this will continue to be done by its private client managers.

Funds under management and advice at the Smith & Williamson group level has reached £15bn for the first time, demonstrating growth of 5.6 per cent in the year.

Group hopes to woo discretionary and wealth markets

Ed Rosengarten says Smith & Williamson is an “entrepreneurial” business where he has been able to air his ideas and implement them in an “unencumbered fashion”.

The fact the company’s funds are little known in the wider market place is something Mr Rosengarten hopes to use to his advantage before he achieves the longer-term aim of its managers having wider profiles.

He hopes to woo the discretionary fund management and wealth management market with its suite of core, conservatively managed funds.

“We are finding the better quality discretionary managers are recognising that in order to justify the value they bring to their clients from an investment point of view, they need to demonstrate they can find and unearth interesting funds away from those funds clients can find themselves on Hargreaves Lansdown or Charles Stanley,” he said.

Mr Rosengarten also believes the industry will open up for houses that can “deliver performance in core areas” after the sunset clause, which will end trail commission paid to advisers and thus may prompt intermediaries to seek funds from houses they have not used before.