Fund buyers have welcomed the imminent return of UK equity star Julie Dean to investment management, as her new employer readies a June fund launch.
Sanditon Asset Management chief executive Rupert Tyer told Investment Adviser the firm would be launching the TM Sanditon UK fund next month for Ms Dean, who has been out of action since her shock exit from Schroders in September 2014.
The vehicle is expected to adopt an investment system resembling the top-performing business cycle approach used on several products run by City fund giant Schroders.
The system was originally built by top Sanditon fund manager Tim Russell during his time at Cazenove Capital, which was later acquired by Schroders.
Ms Dean was among a number of managers who worked for Mr Russell at Cazenove, along with Chris Rice, who has also moved to Sanditon to rejoin his former mentor.
Gary Potter, co-head of multi-manager at F&C Investments, said: “The current odd circumstances in the stockmarket could distort the business cycle, but I still think Julie’s style will succeed.”
The multi-manager added Ms Dean’s general bias towards small and mid caps could be accommodated at the boutique, where he expected she would run smaller amounts of assets.
Mark Dampier, head of investment research at Bristol-based Hargreaves Lansdown, agreed Ms Dean would benefit from working in a boutique environment.
“She is less likely to get overwhelmed with too much money and she’ll benefit from working with the same small team as before,” he said, referring to Sanditon’s directors Mr Rice and Mr Russell, who worked with Ms Dean for 15 years at HSBC and Cazenove.
While at Schroders, Ms Dean saw the assets in her UK Opportunities fund rocket from roughly £1.1bn in March 2013, when Cazenove’s buyout talks surfaced, to a peak of £2.8bn at the end of February last year.
It was at this point that the vehicle’s size began to fall, most likely because of Ms Dean’s uncharacteristic losses of 8.6 per cent for 2014.
The fund launch means Ms Dean will be pitted against former colleague Matt Hudson, who took on the manager’s UK Opportunities fund on her departure and also employs the business cycle approach.
But Jason Hollands, a managing director at Tilney Bestinvest, said “there is room in the industry for more than one team to run money with a broadly similar investment philosophy”.
The Sanditon fund will aim to achieve a return of 2 per cent above the FTSE All-Share index across a three-year rolling period, the company’s website states.
It will sit alongside the group’s three existing products: the Sanditon European Select, European and UK Select funds.
The vehicles all use the business cycle approach, which the company said encompasses “a belief that excess returns can be achieved through stock selection as a result of an appreciation of the effect the business cycle has on companies’ returns”.
One potential headwind cited by Monica Tepes, who as an investment trust analyst at Cantor Fitzgerald followed Ms Dean on a closed-ended vehicle she ran, was the lack of the “vast resources” she would have been able to draw upon at Schroders.
But Ms Tepes added: “On the other hand, when starting up again, it becomes even more important for her portfolios to deliver.
“I expect there are also renewed levels of enthusiasm and commitment, which I believe can have a material impact on returns, while having a smaller pool of assets to manage gives her increased investment flexibility.”
In terms of Ms Dean’s commitment, Mr Tyer said she had “invested a significant amount of capital and is an equal shareholder in Sanditon with Tim and Chris”.
Sanditon’s stance with new fund will be key
Investors have expressed some excitement at the prospect of Julie Dean returning to the fund management fold.
But controlling the amount of money she manages could be key given certain assumptions.
The manager had performed extremely well throughout her career at Cazenove and the level of assets in her fund had remained at a manageable level.
When she arrived at Schroders, the FTSE 100-listed giant’s marketing prowess saw it consume virtually £2bn in about one year. And while it is difficult to know if this is directly related, the manager suffered a rare spate of underperformance.
One suspects given Ms Dean has invested directly in the business and has worked with Chris Rice and Tim Russell for some time, these conversations will have been had.
Investors will no doubt also be keen to know where the manager sees value at present. According to comments made at a roundtable hosted by the Financial Times’s Jonathan Eley, Ms Dean sees mining, oil, banking and food retail as undervalued sectors relative to long-term averages.
