When Nick Clay walked out of Newton Investment Management’s office in Victoria for the last time in early 2020, he was walking away from funds worth £11bn at their peak.
When he first made the journey to the offices of his new employer, RWC, in St James's Park, he was starting again, after more than a quarter of a century in the industry, at close to zero in terms of assets under management.
Since joining RWC, alongside a group of three colleagues that came with him in September 2020, he has gathered £600m of assets across five funds, including winning mandates from Quilter and Mediolanum, which he had previously run at Newton.
While acknowledging “there is a long way to go” to get from £600m of assets to the levels he previously ran”, he said he has no regrets about the move.
“We are back doing what we did at Newton, same process and people, same knowledge base. But the culture of the firm is different, the ownership is different, RWC is 70 per cent employee owned, and my colleagues and I will become shareholders in the firm when we reach the one year anniversary in September.
"We think working for an employee owned firm is vital as it creates the right structure, with the retained profit kept within the frame.
"They are also able to think in the right timeframe. Every strategy has periods of underperformance, and when there are outflows in some firms they can’t tolerate a short-term lull, so the pressure is put on to change the way you do things.
"What a fund manager actually wants at that time is an arm around the shoulder. The way it works at RWC means we can truly treat clients as partners.”
Clay believes that in a world of very low interest rates and technological disruption annual income yield of 3.5 per cent is more “credible” for a fund manager to aim for than the previous level of 4 per cent, but also that income stocks may perform better relative to non income stocks the years ahead.
He said: “For much of the past decade my way of investing, quality income, was written off, as the world since the financial crisis fell in love with the theme of disruption, and with growth stocks, many of which don’t pay a dividend. And that trend was put on steroids by the pandemic.
"About 45 per cent, by market cap, of the index yields less than 1 per cent. We have probably the most out of favour strategy imaginable but have beaten the market for the past 15 years.
"I think in the next five years it will be more volatile in markets as economies are weaned off the drug of government stimulus, and in that environment, the bit of a client’s portfolio that pays an income would account for a bigger part of the total return and those equities will be more in demand.”
He is however wary of investing more into the UK market, as he feels the income bearing stocks are concentrated in a small number of sectors.
Darius McDermott, managing director at Chelsea Financial Services, said: “Nick Clay is a good fund manager who has a strict yield target and is not overly exposed to any one investment style.”
david.thorpe@ft.com
