OpinionDec 7 2015

Nimmo’s pledge should set an example

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Standard Life Investments’ Harry Nimmo must be pretty satisfied with his lot at the moment. This year has seen the manager return to form: his UK Smaller Companies Oeic is top quartile again over 12 months for the first time since 2010, according to FE figures.

After a bad 2014 in particular, Mr Nimmo will clearly be pleased with this result. So pleased, it emerges, that he has committed to at least another seven years in charge of his portfolios. This 2022 target date would mark 25 years in charge of UK Smaller Companies for Mr Nimmo, and almost two decades running the closed-ended version of the product.

At that point, the manager would be 65, and a retirement would surely be on the cards. But it’s refreshing to see the details outlined in this way, a move that his firm said was prompted by investor queries over his plans.

How many times in the recent past have fund buyers been surprised by sudden manager departures? A few too many for comfort, I’d venture – even if we consider only the retirements rather than the company moves.

How many times in the recent past have fund buyers been surprised by sudden manager moves?

A timeline of this kind provides clarity, and enables investors to plan accordingly. Mr Nimmo is also to be commended for declining to call it a day at a point when many suppose returns will prove increasingly difficult to eke out in future.

There are risks to his pledge, nonetheless. I think of the decision taken by Anthony Bolton to pre-announce his own retirement date, a decision that he eventually postponed in a bid to right performance. While Mr Nimmo’s commitment is both longer in duration and open-ended, there is the chance it becomes an albatross around his neck towards the end of the period, just as it seemingly did for Mr Bolton. His mind may change, too.

The manager’s long-term record is such that it would take something disastrous for his role to be called into question in the next seven years, but the trust’s board has evidently given itself room to manoeuvre in any case – cutting the notice period it must serve from 12 months to six.

Mr Nimmo is clearly backing himself to deliver. No surprise there: few fund managers wouldn’t, and admittedly many would love to be in a position where committing to an extended tenure is seen as boldness rather than arrogance. Given the rise of retirement risk, however, I daresay all those invested with a longstanding manager would draw comfort from similar announcements.

Dan Jones is editor of Investment Adviser