How star manager exits could hit Schroders

How star manager exits could hit Schroders

The departure of high-profile fund managers Paul Marriage and John Warren from Schroders could serve as a blow for investors who might look to move their money elsewhere, experts have warned.

The pair are set to leave the asset management giant in the final three months of 2017 to create their own boutique, Tellworth Investments.

Mr Marriage and Mr Warren, who both joined Schroders in 2013 when it acquired Cazenove, will take their UK Dynamic Absolute Return funds with them.

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But Schroders will have to find a replacement manager for its UK Dynamic Smaller Companies fund.

The announcement has sparked questions about whether Schroders will see money leave the funds when the managers move on, and experts have said investors will be looking for reassurance.

Peter Lowman, chief investment officer at Investment Quorum, said: “Unfortunately, for Schroders there is likely to be some investment fallout, given there will be some unit trust holders that will follow Paul and John once they are established at Tellworth Investments.”

He also said it could be disappointing for Schroders that the fund managers are taking their absolute return funds with them, despite seeming like an amicable decision.

“Obviously, any high-profile fund manager that is on the move can be a concern for unit trust holders but it’s always advisable to take some time out to review the situation before making any rash decisions.”

While Mr Lowman said he is not holding any of these funds, he said he will be watching events unfold very carefully.

Jason Hollands, managing director of the Tilney Group, also said his advised clients don’t hold these funds, but described Marriage as a “respected manager”.

In reality, he said there should be minimal impact for investors in the UK Dynamic Absolute Return fund because Schroders has reached an agreement for this to move across to third-party distributor, BennBridge.

This means the fund will continue to be managed on a sub-advisory basis by Paul Marriage.

But Mr Hollands warned that the situation is less clear on the Schroder UK Dynamic Smaller Companies fund, which will stay with Schroders.

“The firm has indicated that they will look internally for a replacement manager and they are a well-resourced business with pedigree in small caps.

“At this stage it is a case of wait and see and evaluate in due course when they’ve named a replacement,” he said, adding there should not be any cause for concern.

Darius McDermott, managing director of Chelsea Financial Services, said this will be a bit of a blow for investors of the smaller companies fund.

“Paul and John have been at the helm of this fund for many years, both at Schroders and before that at Cazenove.

"Given that long period of stability, investors will now be looking for reassurance that the fund's strategy, which has significantly outperformed both its benchmark and its peers under Paul and John's tenure, will continue with minimal interruption.”