‘There’s space to think here, which is very important’

When Julie Dean announced her departure from Schroders two years ago this month, it came as something of a shock to the investment industry. She had been at the asset management giant, as head of the business cycle team, for only a short time – little more than a year – following its acquisition of Cazenove Capital Management in 2013.

But it was less surprising that she turned up again at Sanditon Asset Management – a boutique asset manager that has much more in common with Cazenove than Schroders. It saw her reunite with former Cazenove colleagues Tim Russell and Chris Rice as she launched the TM Sanditon UK fund.

“The environment at Sanditon is very conducive to the sort of way we like to think about markets and about portfolio positioning,” she acknowledges. “We’re quite rigorous in our attention to how we use the business cycle, to ignoring a lot of the white noise that comes from all directions in markets, paying very close attention to the price we pay for stocks, that’s always going to be a key determinant of your return. There’s space to think here, which is very important.”

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Does that mean this was not the type of environment at Schroders? “Schroders is a hugely successful business, a very well-managed business, very good at what it does,” she replies. “The pull for me in coming to Sanditon was that I think I’ve always been a better investor and been happier working in very small team environments and there was a very strong pull to come and join Tim and Chris.”

She suggests: “It’s much riskier being an owner-manager, putting your own capital at risk in a business sense. But that only, in many respects, serves to reinforce the relationship a fund manager should have with their client capital because you are completely aligned in your interests. Our business success depends upon us generating consistently superior returns, because otherwise they will take their money away.”

Explaining the business cycle approach she has been using throughout most of her fund management career, Ms Dean says: “One of the key elements is anticipating change, so anticipating where stock prices are likely to be in the future. Stockmarkets should be a discounting mechanism, so it’s all about trying to anticipate change ahead of time – sometimes when you do that, you can be a little bit early.”

When launching the TM Sanditon UK fund in 2015, she was indeed early in making a buy call on the commodities sector. She admits the fund had a “bumpy start”, as she was buying stocks others were selling en masse. “The fourth quarter of last year was a tougher time for the fund but I wasn’t worried about that, because, having used the business cycle as the anchor to the investment process for the last 20 years, I’ve been through periods where we may underperform for six months or so before the view comes right, which it did this year.”

Now the fund is highly ranked in the IA UK All Companies sector. “If the performance is there and the numbers are there, then people will take notice. People will want to understand how you generate the return and if they believe you can repeat it, they might trust you with their hard-earned cash.