Competitiveness is not an unusual trait in a fund manager, but for Scott MacLennan, manager of the £64m Neptune UK Opportunities fund, the competitive spirit he has transferred from the sports field seems to have paid dividends in his career so far.
“I’m a competitive creature. I’ve played lots of sport in my life and I think it does prepare you for this job – not just being competitive, it is learning to deal with losing, which is a key feature of this job. You can’t win all the time. You have to be able to deal with setbacks and sometimes negative performance because markets aren’t always going to be in your favour, and you have to be resilient enough to deal with that pressure,” he explains.
“I think that is an environment that sport teaches you. I played a reasonable amount of high-level sport and it is in dealing with that expectation and pressure that you learn. The difference is you don’t have a ball in your hand, you have a computer screen and your brain, but it’s the same process and the same emotional challenges that you face on the sports field. If you have a competitive mindset and can deal with setbacks you’re in a more advantageous position, because it is a test of character this job, and it’s a good one.”
For the moment, at least, there has been little sign of setbacks for Mr MacLennan. His route into the industry has been somewhat roundabout, but progression has certainly been speedy.
In spite of reading classics at Cambridge, Mr MacLennan was interested in a finance career, and internships at JPMorgan and Lehman during university left him with a job offer at Lehman. In the meantime, however, the credit crunch hit and Lehman went bust, and while Nomura – which bought part of the Lehman business – still offered him a job, it was not what he wanted.
“I didn’t fancy going to Nomura, partly because I didn’t want to go into an investment bank under complete turmoil and I didn’t want to start straight away. So without a job offer from Lehman, without a job offer from Nomura and knowing I wanted to do investment management, the logical thing for me to go and do then was become a teacher,” he smiles.
He applied for a role as a graduate classics teacher at a boarding school and got it, resulting in him teaching 13 to 18-year-olds for the next two-and-a-half years.
“It was a really quick learning curve and it was a really rewarding and stimulating job in terms of a first job, and I learnt a lot in terms of managing myself, organisation, presenting and articulating ideas. I think it gave me a good perspective on what jobs I wanted to do – being in charge of your own destiny rather than being at the beck and call of someone else, which kind of pushed me towards the buy side of fund management, where you make the decisions.
“It is probably one of the reasons why I’m a fund manager – you get rewarded for good decisions and penalised for bad decisions in a very quantitative way, as if you’re getting your tests back. That sort of competitive environment, that challenging environment and black and white response of financial markets was what interested me,” he says.
Teaching may have been a good training ground, but he says “deep down I always wanted to get myself back into the financial world.” So in the summer of 2011 he started applying to a few firms, mostly investment boutiques, and gained an interview at Neptune which he attended on crutches having torn his cruciate ligament playing rugby.
“Explaining to Robin [Geffen] in my interview why I went off to be a teacher and why I was now returning to London made more sense, as on paper it looked a bit odd. But I think I benefited a huge amount by stepping away from it, and I’m not sure I’d be in the buy side of the financial world if I hadn’t had that perspective. I was just fortunate Robin was willing to give me a shot.”
He spent a successful summer internship working on the industrials desk and was offered a full time analyst position that he took up in January 2012. His determination to succeed in his chosen profession shows in his decision to complete the CFA Level 1 exam in the term’s notice he had to give the school before joining Neptune.
“I was getting my qualifications done so I could hit the ground running,” he says.
As an industrials analyst he worked alongside Alex Breese, who became something of a mentor and “helped me find my feet”, and by November 2012 he was promoted to running his own UK Equity fund and made assistant on the UK Special Situations fund run by Mr Breese.
He became part of the UK team that also includes Mark Martin, although Mr MacLennan says, “I was very much the junior partner of the three, learning from those guys as we went along”.
When Mr Breese departed in April 2013 for Schroders the chance came for Mr MacLennan to step up, and he didn’t hesitate.
“There was a choice to be made on whether I moved up or someone else would come in. I was fortunate enough to be put into that position. It was a lot earlier than I expected – none of us were expecting Alex to leave.
“But I learned a lot from him and was in a position where I felt comfortable enough to take over from him on the fund, having been his assistant almost since I started.
“So when it happened it was a bit of a shock, but it was a challenge I was ready to take on. And it was a challenge, because Alex had been building a very good reputation. It was then my job to go out and express to people that my investment philosophy was largely the same and to explain that hopefully I could deliver the same sort of return, if not better.”
In the six months following his promotion, the decision was made to merge the UK Special Situations and his UK Equity fund to form the UK Opportunities fund. His focus has since been to match and beat the former manager’s performance, and he notes laughing, “last year was strong enough to not be noticed in a negative fashion, which was great”.
Since taking over the fund it has delivered a return of 18.67 per cent to July 17 2014, outperforming both the IMA UK All Companies sector average of 15.68 per cent and the FTSE All-Share index return of 13.85 per cent.
“My highlight was a top-quartile performance last year when people weren’t expecting it, as there was a change of manager and the merger of two funds. There were a number of reasons why I could have underperformed, and it was my complete and utter focus to make sure that didn’t happen.
“It’s almost like being a new football manager coming in and having to maintain the performance of the previous manager – there is a reason why if you’re new there is a bit more pressure on you. I relished that and saw it as an opportunity to prove my worth.
“My plan is to run this fund for as long and as successfully as possible. I’m in no control in terms of asset size, what I am in control of is the performance of the fund.
“I’m very much aware that given my relatively short track record, my first challenge is to end this year as well as I did last year and show, over a longer period of time, that while my progression has been quick and my age is relatively youthful for the fund management industry, that it is not an obstacle – in fact hopefully it is an asset. I know I have to prove that is the case and that is the job to do for the next two, three, five years.”
“But it is one I look forward to.”
CV - Scott MacLennan
2013 - present
Manager of the Neptune UK Opportunities fund and assistant manager of the Neptune UK Mid Cap fund
2012-2013
Manager of the Neptune UK Equity fund and assistant manager of the Neptune UK Special Situations fund
2011-2012
Investment analyst, Neptune Investment Management
2009-2011
Joined a UK boarding school, where he taught classics to secondary school students
2009
Graduated from University of Cambridge with a degree in classics
