In November last year Simon Brazier joined the company from Columbia Threadneedle to become co-head of quality alongside Clyde Rossouw. But with Mr Brazier and the UK equity team based in London and Mr Rossouw’s global team residing in Cape Town, the ambition to create a single global investment platform did seem ambitious.
Mr Rossouw joined Investec in 1999 shortly after the Guinness Flight acquisition, and became involved in running international money, including managing one of Investec’s flagship unit trusts in South Africa.
“I remember starting off with the princely sum of 666m South African rand, which in today’s money is about £30m or $50m. After many years we’ve managed to grow it with a decent track record and to something more substantial. So we’re just under about $10bn (£6.5bn). But it’s not necessarily about the assets, it’s about the performance consistency which has always been important to me,” he said.
Then eight years ago he “had a moment of arrogance where I suggested that the principles we were applying in a single emerging market with a volatile currency and unpredictable economic circumstances, we could apply those same principles internationally and develop a successful strategy out of that”.
This resulted in the launch of the Investec Global Franchise fund, which is now a $4bn strategy, and the start of an international investment platform, with Mr Brazier coming on board at the end of last year with the UK element, along with four other hires from Threadneedle.
Mr Brazier notes: “So we’ve had a pretty seamless integration. Investec were looking for the next part to add to that platform, and [there is a] bit of a crossover with the UK space being a large market and globally focused.”
One of the reasons why the duo was brought together is because they share similar investment styles, he adds.
“What’s good about the way we run money is we’ve both got boringly consistent track records and a long-term focus on buying great businesses that generate cash and reinvest that cash at good rates of return. That’s all we do,” explains Mr Brazier.
He laughingly notes: “Unlike Clyde who used to run a little money and now runs a lot, I used to run a lot of money [at Threadneedle] and now I run a little money.” But he acknowledges that the UK team is winning “quite decent assets already” and adds that should the team find others that run money in a similar way in Europe or Asia, “there is no reason why they can’t come and join the party”.
The pair’s focus is firmly on personnel and whether they will fit into the culture and the team, rather than adding to teams just for the sake of it.
Mr Rossouw adds: “It is always interesting when you add people from a different firm with possibly a different culture; there’s always a question mark about whether you can integrate these things and whether you’ll find a whole host of things that don’t work.
“In some respects after this initial very agreeable engagement, I thought it was too good to be true and there must be something that’s wrong with this process. So we spent the better part of six months, in a way not dissimilar to a relationship, [on the recruitment process]. Before you marry someone, you start off knowing all the good things about them, everyone’s tiptoeing and being nice to each other, and then you’re waiting for this one moment when you finally work out what the weakness is. What is the one thing that is non-negotiable, and the true self comes out.
“You’re kind of waiting for that moment that’s the tipping point of a relationship where it is either something you can work around, work over or work through, or it’s a game changer and you’re not prepared to deal with it, in which case it normally breaks up.”
The managers say while there was no one event that acted as a catalyst to join forces, the “longer the period of courtship was, the more you could work out what those little stresses and strains were and work out how people were going to deal with them and whether that was something you could work with or not. So much of this was about engaging with people”, adds Mr Rossouw.
One way the two managers bonded before officially becoming a team was to climb Lion’s Head, a hill in Cape Town, which allowed them to discuss common values such as stocks and running money, but also the importance of forming the right team.
“One thing in particular is we are very focused on developing the people in our teams; these things are just as important as what measure of free cashflow is the best one to use, and believe me we’ve discussed that as well,” adds Mr Brazier.
He continues: “The most important thing is [being] aligned on the way you treat your team and run your team and aspirations for growth. I remember saying to Clyde, you’ve got $10bn under management, you’ve grown it from nothing, you’ve got a great team, what can we bring to the party? And he said, ‘We haven’t even started yet’, and I thought that’s great ambition.”
Having been in situ for almost a year, what’s next on the agenda for the duo?
Mr Rossouw says: “If you look at our existing strategies and funds, we think there is a huge scope for growth in terms of funds under management. In our Global Franchise we see no reason why it can’t be a $10-15bn strategy, if we continue to deliver compelling performance. In Simon’s UK strategy, there’s no reason that can’t be a $5-10bn strategy as well…”
Then there is “the UK Equity Income launched for my number two, Blake [Hutchins],” adds Mr Brazier. “In the UK there are some very large equity income funds; it’s got £11m in it today but Blake is in his early 30s so he’s got plenty of time to grow that.”
“Global Equity Income is another opportunity for us,” says Mr Rossouw. “We have a number of key flagship global strategies that are definitely a lot more scalable than they are at the moment; that’s where we’re going to focus our attention – certainly for the next couple of years – to execute on the performance of those strategies and grow the client bases on that front.”
In terms of future plans, however, the structure of the platform means “there is no reason we can’t do Asia-specific or China-specific funds or any region, depending on where market demand is or opportunities are”, says Mr Rossouw. “These are all things that are not just on the drawing board but already in the thinking process.”
But Mr Brazier warns: “It’s all about the people. We are not going to go and say we want an Asia Pacific fund, hence we’ll go along and interview and whoever comes along we get. However, if tomorrow the right European or Asia Pacific manager came along who is aligned [with us]… [but] what we’re not compromising on is our philosophy and our process. If that person or team existed and they saw this would be a good home for them to grow and perform, then Investec has made it very clear that’s an opportunity. In the meantime I’ve got to carry on proving I can do what I’ve done in my career, and Clyde’s got to carry on doing what he’s done forever, and we’ve got day jobs as well.”
CVs
Simon Brazier
2014 – present
Co-head of quality, Investec Asset Management
2014 – present
Manager, Investec UK Alpha fund, Investec GSF UK Equity fund
2010 – present
Head of UK equities, manager, Threadneedle UK fund, Threadneedle Investments
1998 – 2009
UK equity fund manager, manager Schroder UK Equity fund, Schroders Asset Management
Clyde Rossouw
2014
Co-head of quality, Investec Asset Management
2003
Manager, Opportunity, Global Franchise and Global Quality Equity Income funds, Investec Asset Management
1999 – 2003
Asset allocation and sector allocation strategist, Investec Asset Management
1991 – 1999
Fixed income analyst and portfolio manager, Sanlam
