OpinionSep 23 2015

Espouse this duo

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Espouse this duo
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Few marriages are made in heaven. I was reminded of this fact only recently when my 32nd wedding anniversary passed without any fanfare whatsoever – sadly, my wife and I have been separated for the past three and a half years (all my fault). No flowers, no cards. Just silence.

Yet there is one marriage – in fund management circles anyway - that seems to be standing the rigorous test of time. Step forward Rob Burdett and Gary Potter, who next April will celebrate 20 years in business together – despite working for a variety of asset managers along the way.

I can hear the champagne corks popping already. What a party they will have as they dance to music from 1996 – the Spice Girls and Wannabe, Wonderwall from Oasis, and most appropriately as far as Burdett and Potter are concerned, Because You Loved Me from Celine Dion.

Burdett and Potter first got together at Rothschild Asset Management in the early 1990s helping build a fund of funds operation with £1.2bn of assets under management. They then moved to Credit Suisse in 2001 to launch a brand new fund of funds business, before departing for Thames River Capital in 2007 to start from scratch again. No one can ever accuse them of not liking a challenge.

Since Thames was acquired five years ago by Foreign & Colonial, they have traded under the F&C Multi Manager banner, although F&C is now part of Bank of Montreal Global Asset Management after being bought by the Canadian giant in early 2014.

Despite occasionally being shoved from one owner to another, and being slightly unsettled at one stage by Edward Bramson’s cost-cutting measures at F&C, not once have they flirted with going their separate ways. They are joined at the investment hip until death do them part. Burdett and Potter forever.

A week or so ago, I had the pleasure of joining this formidable partnership for a quick breakfast (poached egg on brown toast washed down with black Americano coffee) at the swanky Number 1 Lombard Street restaurant in the heart of the City of London.

It is where, I am told, the City ‘meets for breakfast, lunch and dinner, launches new businesses, signs deals and celebrates profits’. We did nost do any of that other than race our way through breakfast and raise a coffee cup to acknowledge (celebrate) the imminent eighth anniversary of F&C MM Navigator Distribution, their flagship fund.

In fact, we spent most of our time discussing funds of funds or multi-manager funds – an investment approach that in recent years has gained widespread acceptance among a big slice of the financial adviser community. All the leading investment houses – the likes of Fidelity, Jupiter and Schroders – now have extensive multi-manager fund operations to assuage this adviser appetite. Even Hargreaves Lansdown, more renowned for its polished fund platform proposition, has a thriving multi-manager investment business.

It is fair to say that Burdett and Potter’s marriage remains as solid as a rock. Potter, 53, is the more gregarious of the two, never short of an opinion or two. Burdett, five years his junior, is the quieter partner, thoughtful and giving off an air of academia with his greying hair.

Aided and supported by five other investment professionals, their fund of funds operation now manages £2.3bn across 10 funds. This year, they are on course to generate £250m of net inflows.

Since April last year, they have also managed £300m of the assets that belong to Foreign & Colonial Investment Trust, the country’s oldest trust. A real coup for Burdett and Potter and an acknowledgement of their importance to the Bank of Montreal investment jigsaw.

They are extremely clever on many levels. First, they have set up their business as a limited liability partnership – each owning a 20 per cent slice with the remaining 60 per cent owned by the bank. This means they have big skin in the game. Certainly, retirement, when it comes, will be a comfortable one – there will be no need for either of them to spend time collecting trolleys at their local Morrisons or greeting customers at B&Q.

Second, and more critically as far as advisers are concerned, the way they go about selecting funds to include in their investment funds is awesome, embracing an array of quantitative and qualitative analysis.

As Mr Potter said, the objective has been to be the best informed buyer of funds that they can possibly be. Early in and then early out when warning bells start to ring, with always a fund substitute lined up. Holding more than 100 funds across more than 60 management groups, they are intimate with another 80 funds – ready-made replacements.

In a nutshell, they are always looking for opportunities that will add value in the future – funds that are not necessarily on the radar of others.

You only need to look at the composition of the Navigator Distribution portfolio to see how ‘left-field’ they are. Funds specialising in peer-to-peer lending, student accommodation, infrastructure and caravan parks are key components of the 34-strong portfolio. Neil Woodford does not get a look-in.

Of course, performance is everything. And it is testament to Messrs Burdett and Potter’s attention to detail that all 10 of their funds have delivered inflation-beating returns over the past five years.

It is testament to Burdett and Potter’s attention to detail that all 10 of their funds have delivered inflation-beating returns over the past five years.

The pair said they still get a real buzz from doing what they have done for the past 19 years.

Along with the Jupiters and Schroders of this investment world they have given fund of funds a good name.

If you have not looked at what they are doing, may I suggest you do. You might find something you – and your clients - like. It could well turn out to be a marriage made in heaven. You happy and your client happy, as a result of the continued harmony that exists between Mr Burdett and Mr Potter.

Jeff Prestridge is personal finance editor at the Mail on Sunday