Advisers need a named manager, but not just one

It has been more than a year since the manager of the Asian Income fund announced his move to Jupiter, but it has been brought to light once more as Newton announced his replacement in Zoe Kan.

The news that Ms Kan is taking over the fund shocked few. The new lead manager has been working on the strategy for more than 10 years and is generally considered an obvious choice for the role.

What is interesting, though, is what this entire episode can tell us about what investors – be they advisers, buyers or direct customers – want from their fund management teams. And also what Newton has learnt from the Pidcock episode.

Newton moved quickly to merge the Asian equity and emerging markets teams under the calming name of Rob Marshall-Lee, but it knew full well it would eventually have to appoint a lead manager.

Ms Kan was already part of the team and, it could be assumed, already qualified to take over. The problem was that fund analysts, buyers and advisers knew of no one but Mr Pidcock.

Some 13 months later, and you would imagine this has changed, with Ms Kan having done the rounds with former, current and potential investors.

The formal appointments of Mr Marshall-Lee and Caroline Keen as alternate managers show Newton has learnt not to allow Ms Kan to have the same effect on investors as Mr Pidcock.

Newton has learnt not to allow Ms Kan to have the same effect on investors as Mr Pidcock. Taha Lokhandwala

The firm does have form on alternate managers, but these were appointments with a nod to the future.

The impact of Newton’s mistake in not allowing investors to fully see, and appreciate, its Asian Income team was felt in the aftermath of Mr Pidcock’s decision.

Investors knew nothing about who would be taking over, and this showed in the outflows.

When Newton’s James Harries exited to Troy six months later, leaving behind his then £4.5bn Global Income fund, the firm was not hit by the £2.2bn of outflows that plagued the Asian Income version.

The portfolio has seen inflows since, but why? Investors knew alternate manager Nick Clay and were immediately appeased by his appointment.

The firm could have left Asian Income under the banner of ‘team-led’ and not made a lead appointment.

But such funds, even in the wider industry, are few and far between. Investors want a name. They appreciate a team, but they require a figurehead to hold to account.

Research from FE revealed advisers are now more likely than ever to drop a star name, and brand power is apparently fading. But it also shows ‘star managers’ pose the greatest risk to asset management companies, despite being an obvious asset.

FE may be correct. But fund houses must find the right balance between having a name on a fund, and learning from Newton to make sure it isn’t the only one. Because what is clear is that investors want a figurehead – star or otherwise.

Taha Lokhandwala is news editor at Investment Adviser