Fund buyers have described Richard Buxton’s shock resignation from Schroders as a major loss for the firm.
The multi-managers have said that, while investors should avoid reacting too hastily to the news, they were deciding whether to sell out of the manager’s flagship £3.4bn Schroder UK Alpha Plus fund last week.
Mr Buxton, head of UK equities at Schroders, quit the firm along with colleague Errol Francis last week, as revealed by Investment Adviser.
Legal & General Investments multi-manager Alan Thein – an investor in Mr Buxton’s funds – warned against a “knee-kerk reaction” but said he was “watching flows to see if others leave”.
“We had Richard Buxton down as the ‘key man risk’ with that fund. If he has gone then the thesis behind the fund is gone,” he added.
Aidan Kearney, co-head of multi-manager at Aberdeen Asset Management, said he believes the company will have difficulty replacing Mr Buxton.
“From Schroders’ perspective, the heart has been taken out of their UK franchise. I think it will be painful,” he said.
Mr Kearney said he believes Schroders should “start again” rather than trying to maintain Mr Buxton’s legacy.
“Richard is so linked with his strategy, and the recent 10-year anniversary just reinforced that,” he said. “They have made a big play of getting more stable adviser investors into the fund. It has taken 10 years to build it – but the danger is it could [take] 10 weeks to destroy it.”
Gary Potter, co-head of multi-manager at F&C Investments, said it was a “significant loss” and, as holders of the fund, an issue his team “will have to deal with”. “One of our most favoured investors has departed, and we will have to review that in the context of what Schroders says, but we buy people,” he said, adding that Schroders is a “very big company with a lot of UK talent” and one of the “few which could handle something like this”.
Mr Buxton and Mr Francis will remain at Schroders until June before joining Old Mutual Global Investors’ UK equity team. Mr Buxton will take over as head of UK equities.
Longstanding Old Mutual star Ashton Bradbury will report to Mr Buxton under the new structure. Mr Buxton plans to revamp the £160m Old Mutual Equity 3 fund, which he already runs, as the Old Mutual UK Alpha fund – his new “flagship” product.
Schroders’ head of intermediary, Robin Stoakley, said: “Richard, Errol and Schroders believe it is in our clients’ best interests to continue to manage the funds until Schroders appoints permanent replacements.”
Old Mutual Global Investors’ chief executive Julian Ide last week told Investment Adviser that Mr Buxton would be “hugely complementary” to its existing team, which includes small-cap star Dan Nickols.
Mr Ide said he believes the company now possesses the “leading UK equity franchise”, and the latest appointment goes towards his goal of making the firm the “leading asset manager” he wants it to be.
The firm includes the former Old Mutual Asset Managers and Skandia Investment Group entities that were recently merged into a single London-based asset manager.
Earlier this month it merged away the former Skandia UK Best Ideas fund in an early sign of its intention to reposition the range.
What Schroders is saying...
Peter Harrison, Schroders’ head of global equities, has told Investment Adviser he is under “no immediate pressure” to decide whether to hire in a replacement for Richard Buxton or promote from within.
He pointed to Mr Buxton’s and Mr Francis’ decision to stay at the firm until June to give the firm time to find a replacement.
“Schroders in the UK is phenomenally strong, and if we wanted to go outside I think we would have the pick of the bunch,” he said, adding that several major fund brokers have pointed out that Mr Buxton’s existing investors have lots of time to decide what to do.
