He explains the emergence of multi-asset in recent years has come from the way the industry has “changed in its nature”. The traditionally separate industries of institutional pension management and the regulated funds business have altered.
“The regulated funds business very much provided the add-on investment vehicle to consumers,” says Mr Jane. He points out the large proportion of consumers’ invested assets were once in life insurance policies and company pensions, but as regulation changed and the industry evolved, “more and more of the investable assets have ended up in collective investment schemes”.
But he notes the problem has been that the collectives industry has tended to focus on input-driven products – funds that invest in areas such as UK or emerging market equities, or emerging market government bonds.
Instead he suggests: “If you’re investing with your core savings what you actually want is output, and there has been very little output-driven products. But as regulation has changed and enabled, it has become possible.”
He adds that the biggest growth in the industry needs to come from products that “focus on delivering a certain output to the consumer, rather than giving them the input and letting them mix the inputs together to create the output. We need to provide ready meals and not ingredients.”
This issue is clearly important to Mr Jane, who left M&G in 2010 to launch his own business, Darwin Investment Managers, with a focus on delivering “outcome-driven strategies”.
“The collective investment scheme industry, historically, has not been very good on focusing on customer needs – it is always focusing on inputs. It is a different way of thinking about the product. We need to focus on what customers need, not what we like to produce,” says Mr Jane.
“That is one of the main reasons I got involved in mixed asset. I think there is a huge opportunity to deliver certain types of risk-reward and focusing on customer needs. Throughout my career I was always global, [and with multi-asset] you have a broad exposure across a huge number of asset classes. What you learn looking across [all] markets is more profound than staring at little tiny markets.”
After three years establishing Darwin and his multi-asset fund, Miton came knocking and asked to buy the business last year. “They offered distribution, brand and bigger capacity, so we basically accelerated the development of the strategies by several years in short order,” he says of his decision to sell.
“I’m a pragmatic individual and I think you have to be. When you make investment decisions you have to be utterly pragmatic and not guided by emotion, and I tend to apply the same [principle] to business decisions.”
As an example he notes in a previous role at Newton: “I closed down a fund I had set up and launched because it was the right commercial decision. When we were at Darwin I was happy to make the decision to sell the business to Miton because it was the right thing to do commercially.”
“Briefly, for a moment, I thought [it was] a shame,” he adds, “but then you move on and say we move faster this way. Many mistakes are made in life by letting emotional aspects get in the way of rational, considered decisions based on the evidence. I like to make decisions based on fact and evidence.”
Since joining Miton, one of the main challenges for Mr Jane and his team has been turning around the performance of the multi-asset funds he took over from Martin Gray following the manager’s departure in June 2014. The range had seen significant outflows.
Mr Jane’s team overhauled the portfolios and also renamed the Special Situations and Strategic Portfolios in March this year.
It is unsurprising therefore that Mr Jane cites “getting those funds on creation again”, as his biggest highlight since joining the firm.
“The funds we inherited were redeeming at a very, very rapid rate. There was a disturbing shrinking in the AUM [assets under management]. Getting the performance back on track, getting the numbers back to where they should be and what the clients deserve and merit, was a year of hard work. The payback is getting net inflows again. That was just a huge relief.”
However, Mr Jane says a bigger challenge was not rejuvenating the portfolios but dealing with the unpredictability of markets.
“They always change, they are never static, there are new challenges every year. It is always different, it is never the same. That’s what fascinates me, but is also what causes sleepless nights.”
That said, he stresses the importance of being able to switch off, otherwise “you become stressed and you’ll make bad decisions”.
With market volatility remaining high in the aftermath of August’s Black Monday, the manager highlights the benefits of a true mixed-asset strategy.
“We’re not constrained to own anything and we cannot lose money in what we don’t own. So because we’re not constrained by some benchmark, we don’t have to own any UK equities if we don’t want to,” he explains.
“People say it’s tricky because you have to look at everything, but I would retort that we don’t have to look at anything. There is nothing we’re forced to own that we therefore have to have a view on. So in that sense you construct a portfolio of things you think will earn sensible returns and then you construct the portfolio understanding the client’s risk tolerance in the market environment. It’s the risk that changes, that is the variable.”
So a year on, what is next on the agenda for the multi-asset team? For Mr Jane it is building on momentum, product development, and increasing assets under management while looking after customers’ needs.
He suggests any new offerings might only be considered “if there is a real genuine customer need for this investment outcome and we think we can deliver it”.
But he warns the fund management world is “littered” with people who have gone beyond their core competencies and overextended their skillsets.
“It’s excellence that matters not volume, so we’re not going to be a firm with, say, 10 risk profiles. It is not going to happen. How can we do all of those outstandingly well? We can’t. We can only do so many things outstandingly well and be brilliant at that [otherwise] we end up with a whole range of bland me-too alternatives.”
Instead, he says the aim remains to “deliver the risk-return profile they want more successfully, consistently and repeatedly over time. If we do that across the suite of products, inevitably we will grow.”
Now the multi-asset funds are “back in the right direction”, he notes the firm is planning a “big push” to boost its market position.
“It is a tiny market share, but Miton has a uniformly excellent product range. The fund management industry is not governed by the rules that apply to other industries. You really can be a small business that suddenly gathers £10bn of assets. I think there is a huge pie out there and if we do our jobs properly and do them well and focus on the customers, we can get more of that pie every year. There is nothing to constrain us from doing that.”
CV
David Jane
June 2014 – present
Head of multi asset, Miton
2011 – 2014
Manager, Darwin Multi Asset fund, Darwin Investment Managers
2011 – 2014
Founder, Darwin Investment Managers
2000 – 2010
Head of equities M&G, manager M&G Cautious Multi Asset fund
1998 – 2000
Deputy head of research, Axa Investment Managers
1992 – 1998
Director of global financials research, Newton Investment Management
