A tale of two boutiques was told last week. The first half was an overhaul at Barry Norris’s Argonaut. The second was the departure of Miton’s George Godber and Georgina Hamilton to Polar Capital.
The changes at Argonaut were pinned on Mr Norris’s decision to buy out Standard Life Investments’ minority stake.
But I imagine few would have given much thought to SLI’s relationship with the firm in any case. Of more interest to those selecting funds is the simultaneous departure of Olly Russ to Liontrust.
Mr Norris said the change would allow Argonaut to focus on its core range of absolute return products, but there was certainly something to be said for Mr Russ’s offerings.
European income may not have been the easiest sell historically, but there could now be an increased appetite in view of major UK payers’ high-profile problems.
Part of Miton’s problem stems from its success last yearThat leaves a slimmed-down Argonaut. Scaling back a product range is hardly a risk-free venture. But Argonaut, run by its founder, will at least avoid the kind of key person risk that reared its head at Miton last week.
The story is familiar: managers build up a track record, and assets, only to jump ship to a rival.
Polar Capital’s attractions are particularly obvious when viewed in the context of research by Numis Securities, which puts its average salary per head at £346,000 – almost £70,000 higher than any other UK-listed asset manager.
Little evidence here of the trends identified by a PwC study which last week predicted the imminent decline in ‘star’ manager pay packages.
Indeed, despite all the talk of pressures on asset managers, Polar is among those which sit squarely in the industry sweet spot: $10-20bn in assets, a broad spread of products, and those eye-watering wages.
Miton’s new-found problem, by contrast, may have stemmed from the fact that its attempt to catch up with such peers went too well last year.
At the start of 2015, Mr Godber and Ms Hamilton’s UK Value Opportunities fund accounted for 10 per cent of the firm’s assets. Its asset gathering meant this proportion had risen to 28 per cent by last December, creating out of nowhere a major employee risk.
No doubt Miton was conscious of this, and did what it could to mitigate the problem. Its annual report notes its policy “to have two named fund managers on each strategy”. Sadly, that’s not much help when both decide to leave.
All this said, the company may stand a better chance of recovering than the resultant 25 per cent slump in its share price suggests.
Judging illiquid Aim stocks by short-term moves isn’t very wise – the drop has erased little more than three weeks’ worth of gains, after all.
Admittedly, Miton’s profit warning of 18 months ago may yet be repeated. But at that point, as now, few were predicting the sudden resurgence which then followed. The lesson may be that smaller players can bounce back just as quickly as they are knocked down.
Dan Jones is editor of Investment Adviser
