Equities  

News Analysis: Searching for future stars

The roll call of star fund managers retiring, taking a sabbatical or moving to boutiques grows longer by the day.

Jeremy Tigue and Ted Scott are retiring from F&C, Richard Plackett is taking a sabbatical from BlackRock, while Neil Woodford is soon to leave Invesco Perpetual for Oakley Capital.

So where do multi-managers and discretionary managers expect the next generation of top fund managers to come from?

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Caspar Rock, chief investment officer at Architas, says: “We cover each asset class with a lead and back-up analyst and it is their job to be prepared with a ‘substitutes bench’ in case of such an event. When the BlackRock European Dynamic fund closed to new subscriptions, we knew where to turn.”

Andrew Summers, Investec Wealth & Investment head of fund research, says most fund houses have deputy managers who are being trained up to take over when lead managers leave or retire. “In many instances, these [deputies] could provide a deep bench of future managers. Examples include Michael Stiasny and David Williams deputising for Tom Dobbell, and Chris St John deputising for Nigel Thomas (in spite of neither having any plans to retire).”

He says Mr Plackett’s sabbatical is an op-portunity to follow BlackRock’s Ralph Cox and Franklin Templeton’s Richard Bullas.

David Coombs, Rathbone Unit Trust Management’s head of multi-asset investment, says it is casting its net further afield and looking at US and Asia-based managers, who may not have much UK presence, but who may come into the retail market, having run institutional money overseas.

James de Bunsen, multi-manager at Henderson Global Investors, thinks new talent will come mainly from the big asset management houses which have the resources to train graduates.

That said, he likes boutiques such as Majedie Asset Management, the UK equity specialist, which has done some graduate hiring.

He rates James Sym on the Schroder European Alpha Income fund, Chris Reid on the Majedie Income fund and Kennox’s Strategic Value fund, run by Charles Heenan and Geoff Legg.

Mr Summers says Investec’s preference is for veteran managers running small funds, citing Michael Dobbs, whose Schroder Small Cap Discovery fund is still sub £50m and Gervais Williams at Miton, who has been disciplined in limiting his capacity.

Elsewhere, he says there are plenty of good equity managers who are relatively unknown in the UK, such as Keith Creveling at American Century, whose Concentrated Global Growth Equity fund is less than $50m and Charlie Dutton at Coupland Cardiff.

Mr Coombs tips Slater UK Growth and GVO UK Focus: “They aren’t necessarily run by younger managers, they are just smaller funds, below the radar.”

But are there barriers to entry for younger managers and funds and at what stage will multi-managers and discretionary managers support them?

Is the current regulatory regime supportive of new funds or does due diligence mean the majority of investors will not touch a fund until it has a three-year track record or has £250m assets under management?