It’s been more than two and a half years since Richard Pease revealed his plan to leave Henderson and set up his own company, Crux. The deal involved was unusual, but last week we saw signs that it may not be wholly unique.
Mr Pease’s departure saw him take his £1bn European Special Situations fund with him. It has parallels with the decision made by Paul Marriage and John Warren to leave Schroders in favour of forming their own boutique, Tellworth Investments.
Like Mr Pease, Mr Marriage and Mr Warren will also be taking one of their funds – UK Dynamic Absolute Return – with them. Like Mr Pease, their departure comes a few years after their previous employer was swallowed up by their current firm.
But there is one important difference between the two scenarios. Mr Pease was able to take his fund across as part of an agreement made with Henderson when he joined from New Star in 2009. It’s not thought that the Schroders pair had a similar arrangement stemming from their move from Cazenove in 2013.
That makes sense, because the circumstances of Henderson’s deal for New Star remain distinct: its overriding desire to retain the latter’s ‘star’ managers among them. The subsequent court case between Mr Pease and Henderson shows that even the best-laid separations can go awry at the time of parting, but last week’s deal does show there may be another way.
In today’s environment, when raising money is more of a challenge for active firms, starting out with an existing pool of money is becoming more important.
Fund groups won’t give up assets without a fight, naturally. Managers will need deep pockets to extricate themselves from current arrangements and take their portfolios with them. But at a time when industry certainties are being challenged in other areas, firms may be willing to be more flexible on the issue.
Manager exits often lead to outflows, time and money being ploughed into client communication, and an endpoint where the old fund is, if not subscale, then unlikely to attract more assets in the foreseeable future. In certain cases, particularly if a sweetener is applied to the deal, an amicable arrangement may be easier for all concerned.
Why is this of interest to fund buyers? A widely-acknowledged preference for boutique business models has not been met with greater supply. Despite some high-profile managers setting up on their own, the number of boutiques in fact halved in the two years to October 2016, as Investment Adviser reported last year.
A change to that state of affairs will take significant resource on the part of individual fund managers, but the typical industry pay packet should mean they are well prepared. And fund selectors will be grateful for the opportunity to spread their net a little wider.
Dan Jones is editor of Investment Adviser