There’s a strange silence pervading the retail asset management industry of late.
Perhaps the tribulations of 2016 are still ringing in chief executives’ ears, or perhaps it’s just that time of year. But activity seems pretty muted wherever you look. Few funds are being launched; nor are many being closed. High-profile manager moves have been rarer still. And, as flows have dried up, the capacity issues plaguing all manner of funds have rapidly receded.
It probably feels quite refreshing for intermediaries and other fund buyers. Reallocating sizeable chunks of money due to a manager departure or a fund soft-closure is an inconvenience at best, an administrative nightmare at worst.
It could just be a temporary lull. Let’s not forget we are nearing bonus season – having feathered their nest, managers are most likely to migrate when spring arrives.
Might this year be the start of something different, though? We will find out soon enough. But I wonder if the events of the past 12 months could be another nail in the coffin of the ‘star’ manager concept.
There will always be a select few big names able to draw in the cash. But set against a tougher investment backdrop that band might just be dwindling. For example, many of the capabilities intermediaries now look for from an active manager – multi-asset ‘solutions’, alternative income strategies, absolute return funds – are often associated with team management, rather than one or two individual names.
But there is more to it than that. Take Polar Capital’s UK Value Opportunities fund, run by Georgina Hamilton and (later this year) George Godber. The pair’s exit from Miton, 12 months ago, was the last time a notable amount of assets were shifted around as a result of a manager move.
To an extent, this ‘star’ power is already defined negatively. Hundreds of millions of pounds can be reallocated on the news of a departure, but rarely does it all find its way to the manager’s new home. By the time a new product is launched, buyers have often turned their attentions elsewhere. With one or two obvious exceptions, perhaps star power isn’t as bright as we were led to believe. Polar’s success, or otherwise, will be one test of the theory.
Another will be to see just how many of these kind of moves continue to materialise. Chief executives must decide whether manager reputations can overcome investor uncertainty, or whether starting from scratch just isn’t the opportunity it once was.
Dan Jones is editor of Investment Adviser