High-profile departures from Old Mutual Global Investors (OMGI) have caught the attention of fund selectors, but the company has insisted the moves are unrelated to ongoing corporate changes at the business.
Last week, it emerged fixed income head Christine Johnson was to exit after it was agreed her role was “no longer required” following an overhaul of the firm’s bond division.
That followed the departure of European equity manager Kevin Lilley earlier this month, and the sudden exit of absolute return specialist Russ Oxley following a “difference of opinion regarding future strategic direction” last summer.
While the three moves have not been directly linked to one another, fund selectors have suggested corporate developments could be a factor. OMGI’s parent company Old Mutual Wealth (OMW) is in the process of being spun out of the wider insurance business of Old Mutual.
“It’s not that there’s a big ‘for sale’ sign, but they have said they are investigating ways to monetise their business,” said Richard Philbin, chief investment officer at Wellian Investment Solutions. “It could be spring cleaning.”
The changes may represent the differing styles of former OMGI chief executive Julian Ide and his replacements, CEO Richard Buxton and managing director Warren Tonkinson, according to insiders.
Mr Ide left the company in August 2015, having overseen a rapid expansion in the business. In his final months, it was the wider OMW business that took the headlines with the acquisition of discretionary manager Quilter Cheviot in February 2015 and adviser network Intrinsic in 2014.
A person familiar with the situation, who wished to remain anonymous, said: “OMGI reformed in 2012 under Julian Ide. Its culture and success was formed in those years.
“The strategy was being an independent boutique of distinctive funds. Since the mergers [with Quilter and Intrinsic], the architect of OMGI’s success left, and I think the strategy then changed.”
The Quilter and Intrinsic deals form part of OMW’s announced strategy of “vertical integration” – combining a product provider with a firm that distributes those products.
Four fifths of OMGI’s inflows in 2016 came from external clients rather than sister companies, but the acquisition of distribution arms has continued in recent weeks with the announcement that OMW is to buy adviser network Caerus.
“As part of a bigger wealth management company as opposed to a fund manager, you might want to have a greater number of products across a waterfront as opposed to a [smaller number] of distinct products,” the source said.
The departure of Ms Johnson and Mr Lilley could be a reflection of this philosophy, and of the simple fact that both managers’ fund performance has underwhelmed in recent years, according to City Asset Management research director James Calder. Mr Calder added that he perceived the firm to be a “hard taskmaster” when it came to performance.
“[OMGI is] probably not as known for fixed income and other asset classes. If things aren’t working well, it’s a performance-oriented business. You are selling products based on performance. You can’t sell fourth quartile funds.”
OMGI: We are well placed to grow
OMGI’s managing director Warren Tonkinson said in a statement: “Old Mutual Global Investors has evolved and grown under Richard Buxton’s 18-month leadership.
“Assets under management [AUM] have increased by £10bn, several senior investment professionals have joined and a small number have left us as a result of decisions taken by the business. We are well placed to continue on our successful journey.”
The company has been active on the product front in recent months, launching a Gold & Silver fund, a UK Specialist Equity portfolio and a Style Premia Absolute Return fund, among others.
KEY NUMBERS
11%
Rise in 2016 pre-tax profit at OMGI, to £79m
74%
AUM-weighted proportion of funds that have outperformed on a three-year view
