Major corporate changes dominated the investment industry landscape in 2014 with several significant fund group mergers.
The biggest deal was between Aberdeen and Scottish Widows Investment Partnership (Swip), which created the UK’s largest asset manager at the time with assets of £350bn.
Throughout the year Aberdeen saw multibillion-pound outflows from its own funds, but the pace of money exiting appears to have slowed, according to a recent update from chief executive Martin Gilbert.
The overhaul of the merged business saw several senior Swip departures happening shortly after the transaction, followed by the majority of Swip’s active equity team also leaving.
Swip had changed a large number of its active equity funds in 2012, moving them to quantitatively managed passive strategies, leading to the departure of a number of managers including head of UK equities Peter Cockburn.
The group had attempted to realign the division to mostly passive under director of global equities Will Low, but he also left following the takeover by Aberdeen.
Another major deal was that of Standard Life Investments (SLI) taking over Ignis Asset Management. Once again, several senior Ignis employees left in quick succession, but the departure of a key Ignis team did not appear to be in SLI’s plan.
SLI had in presentations about the Ignis purchase stated the latter’s Absolute Return Government Bond fund “complements” its own suite of absolute return funds, such as the giant £22bn Global Absolute Return Strategies fund.
But Russ Oxley and five team members quit the group in October to join rival Old Mutual Global Investors (OMGI), prompting major backers of the fund, including Rathbone Unit Trust Management’s David Coombs, to sell out.
OMGI plans to launch a range of fixed income absolute return products with Mr Oxley at the helm.
It was not a quiet year for Old Mutual Wealth either after it dropped the 35-year-old Skandia name from its platform, bought restricted adviser network Intrinsic and also acquired the Cirilium multi-manager range, half of which was owned by Intrinsic and half by Henderson Global Investors.
Another deal that was struck later in the year was that of Legg Mason and Martin Currie.
As part of the deal, Martin Currie is to be combined with Legg Mason Australian Equities, adding its $2.5bn (£1.6bn) in assets to Martin Currie’s $9.8bn in assets under management.
Joe Sullivan, president and chief executive of Legg Mason, said the acquisition of Martin Currie “fill[s] our largest product gap” and emphasised the firm’s key capabilities in global emerging markets, Asian, European and global equities”.
Martin Currie will become an affiliate of Legg Mason, which has several underlying businesses, including Brandywine and Clearbridge.
The takeover will mark a new chapter for Martin Currie, which in 2012 endured a £3.5m FSA fine for failing to manage a conflict of interest between two of its clients.
This was the largest fine ever imposed by the then regulator in a conflict of interest case. In addition to that fine, the US Securities and Exchange Commission also fined the company $8.3m in the US.
ESTABLISHED FUND MANAGERS GOING IT ALONE
Woodford Investment Management
The most high-profile launch was that of Neil Woodford’s new business, which already runs £8.5bn in spite of only opening for business in June. The CF Woodford Equity Income fund was £3.7bn in size at the end of November and the manager successfully retained the mandate he ran for St James’s Place, which is of a similar size.
Loyal supporters seem to come in all sizes, with FTSE 100-listed, direct-to-consumer platform Hargreaves Lansdown still championing Mr Woodford and investment stalwarts such as John Chatfeild-Roberts also backing the fund.
While the first six months have appeared trouble free, the group recently saw chief operating officer Nick Hamilton and chief legal and compliance officer Gray Smith exit.
Crux Asset Management
The move by Richard Pease to join start-up Crux Asset Management was revealed by Investment Adviser and featured an unusual twist.
Yes, the manager was leaving Henderson Global Investors, but he was taking his £1.1bn European Special Situations fund, which is top quartile in five years, with him.
It is now understood Mr Pease had the ability to take the fund with him thanks to a deal struck with Henderson at the time it bought out his previous firm, New Star.
Henderson’s James Milne, a co-manager on the Special Situations fund, also joined Crux, which has former Morgan Grenfell Asset Management and Thornhill Holdings director Alistair Reid as its chief executive.
Coram Asset Management
Just a week after the announcement about Crux, former Miton multi-manager James Sullivan announced he was also setting up his own firm. At present, Coram is a trading name of RC Brown Investment Management, but Mr Sullivan has plans to make the business a standalone entity majority owned by senior staff.
Shortly after the news of the launch, Mr Sullivan revealed his former colleague, Martin Gray, would be joining the business in January.
Mr Sullivan told Investment Adviser the duo had learned lessons from the past. The managers’ defensive stance meant they successfully navigated the financial crisis and the extreme volatility in 2011, but failed to capture much of the upside in the post-crisis rally.
