InvestmentsMay 2 2013

Schroders retains Buxton’s UK Growth mandate, waives fees

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Schroders has retained the mandate of the £271.9m UK Growth Fund investment trust after its board decided not to follow Richard Buxton to new employer Old Mutual Global Investors (OMGI).

Mr Buxton is set to leave Schroders for Old Mutual in June, after more than a decade of managing the trust on the company’s behalf.

He will be succeeded by Julie Dean, manager of the Cazenove UK Opportunities Fund and the Cazenove UK Equity Fund, as lead portfolio manager, the board has decided.

Schroders is set to buy up Cazenove in a separate deal that completes in July, meaning it will then immediately regain control of the trust.

The trust’s board said management fees will be waived for the first 6 months after the manager change, as a contribution to portfolio transition costs.

The management fee charged by Schroders to the trust will be cut to 0.60% of the trust’s net assets less current liabilities and the trust will also no longer be charged a separate secretarial fee.

In a statement, the UK Growth trust’s board said it “was impressed with Julie’s consistent performance and pragmatic approach to investment, which combines earnings-based security selection with a top-down business cycle approach.”

“Julie avoids style or size bias within the portfolios she currently manages and the same approach will be taken in relation to the Company’s portfolio,” it added.

“This is an encouraging outcome for Schroders,” Numis analyst Charles Cade said, adding that he expected the trust’s share price discount to net asset value to narrow now that the management has been clarified.

In March, Investment Adviser revealed Richard Buxton had resigned after 12 years as head of equities at Schroders to join OMGI.

Since that time, the discount UK Growth trust has widened to double figures.

The analyst noted that Ms Dean’s style “is very different to Richard Buxton, with a more diversified portfolio (61 stocks at present) and greater exposure to mid caps”, but praised her strong track record on the Cazenove UK Opportunities fund.

Last month, Investment Adviser reported that OMGI was looking to pitch for the UK Growth mandate, as it regards investment trusts as “a strategically important investment vehicle for the UK market.”

Mr Clifton said: “Some have suggested they would like Mr Buxton to continue albeit in a new home, and we can take on board that point of view. He has performed very well – we are genuinely pleased.”