Sanlam’s UK investment arm is returning to its boutique roots, backed by the scale of its South African parent, as it hits £5bn in assets under management with a view to hit £10bn in three years’ time.
Tom Carroll, head of asset Management at Sanlam Investments UK, told FTAdviser the firm intends to go back to being a pure asset management firm following the sale of Sanlam's wealth and life business.
What began as a boutique firm in 2007 by former Schroders employees became an internationally backed, and eventually acquired, investment manager.
“We're going full circle. With Sanlam selling the wealth business and the life company in the UK, we're now going back to being a pure asset manager.
"It will be that boutique structure with the strength of a parent which can help us grow and build the business.”
Carroll added: “Scale for us isn't £100bn. We're more than £5bn [in assets under management] now. If we were £10bn in a couple of years' time - or three years' time - that would be great.
“We’re not going to turn into a Blackrock or Schroders overnight. We've got to continue to focus on where we can add differentiated, specialist products for our clients.”
When you're part of a wider group where one minute somebody from Sanlam will be talking about IFA networks, or adviser stuff, and the next minute you’ve got somebody from our side talking [about investments], it creates some confusion in the marketplace.CarrollA big roadblock Sanlam’s investment arm has faced in recent years was the lack of clarity around its product offering, he said.
“When you're part of a wider group where one minute somebody from Sanlam will be talking about IFA networks, or adviser stuff, and the next minute you’ve got somebody from our side talking [about investments], it creates some confusion in the marketplace.”
The group-wide restructure has seen Sanlam syphon off its adviser network, its wealth arm for £140m, and its pensions business for £39m.
Carroll said the restructuring has allowed the group to re-establish a purer focus, and a “purity of message”.
In this vein, the last two points of the group’s three-point plan - which began last year with the organisational overhaul - are to hone in on marketing and digital distribution, as well as investing more in specialist themes.
At the end of January, Sanlam Investments took over a raft of portfolios currently run by Smith & Williamson Investment Management, including its Artificial Intelligence fund.
This AI fund, which held £600m AUM upon its transfer in January, now holds more than £900m AUM under Sanlam’s management, according to Carroll.
“If I’m being honest, the AI fund - and the team running it - were the target of our interest [in the Smith & Williamson deal]. It’s continued to deliver really strong performance for clients.
“When you look at the long-term opportunity for a thematic fund like this, which is focused on companies adopting AI to transform their business model, it’s not just about the technology sector - there are only about 50 per cent [of businesses] in the tech sector.
“This is a long term theme focusing on companies which are early adopters of technology that are willing to be innovative and change. It's a trend that's got a very significant path of growth for a long period of time.”
Part of Sanlam Investments’ strategy is to employ subject matter experts. Carroll explained that with the firm now being more open to specialist approaches, it has attracted more specialist interest. This should mean that communicating the niche investment strategies is easier, than if generalists were employed.
We don’t envisage having thirty or forty products - if we had general funds that everyone else has, why would people buy them from us rather than one of the bigger fund houses?CarrollThe idea is to communicate, through its focus on marketing and digital distribution, the message that Sanlam Investments is “a good home” for experienced investors and specialists.
“I'm anticipating that more people will come and find us,” said the fund boss.
One team which joined the business is a group of bond investors who joined from wealth management firm Tideway. The team, and their funds joined Sanlam in April 2020.
Carroll acknowledged that the fixed income product range run by these individuals was at the niche end of the spectrum, but said new products were on the way - potentially by having that team work with Tom Wells and his colleagues, who run fixed income products that arrived when Sanlam acquired the Smith and Williamson funds.
He said: “We don’t envisage having thirty or forty products, I mean if we had general funds that everyone else has, why would people buy them from us rather than one of the bigger fund houses?”
The creation of a standalone fund management business has not negatively impacted the company's profit and loss account, according to Carroll, as he said while the new firm must incorporate costs that were once shared, the reverse is also true, with the new business no longer contributing to the shared costs that he feels did not benefit the asset management business.
In terms of growing its adviser distribution channels, Carroll said with buyers doing their own screenings, it was more important Sanlam Investments met their clients’ needs from a digital perspective.
Its sales team will therefore remain “relatively small” on the financial adviser side, which is currently focused on wealth. “We can’t be all things to all men,” Carroll concluded.
ruby.hinchliffe@ft.com & david.thorpe@ft.com
