Philip Rodrigs faces an uphill battle launching a boutique investment business in the era post-Neil Woodford scandal and a “cloud” hangs over his head following his dismissal from River & Mercantile for alleged misconduct.
Rodrigs’ firm Raynar Portfolio Management opened its doors this month. He owns between 50% and 75% of the business, which was incorporated last September, and is also its chief executive, filings from Companies House show.
The venture marks Rodrigs’ first return to the industry since he was sacked by River & Mercantile in February 2018 following a two-month investigation into his professional conduct. His sudden departure stunned the industry who had pegged him as one of the industry’s rising stars in the UK small cap space.
This month the company launched its first product, the Raynar Enhanced Portfolio, which is run by Rodrigs’ business partner Matthew Taylor and Rodrigs (pictured) is reportedly in the process of opening a small cap fund of his own.
Boutique managers under a microscope in the Woodford era
Tilney managing director Jason Hollands said thanks to the blow-up of Woodford’s boutique Rodrigs and other managers setting up their own shops will face even tougher scrutiny.
“The due diligence bar is clearly very high now for any manager launching a new boutique of their own, following the Woodford debacle, so this is certainly a tough environment to get any new fund business off the ground,” Hollands said.
“I mean, you’re not going to launch with a £1bn on day one,” said Chelsea Financial Services managing director Darius McDermott. “And there is this cloud,” he added. “Whether it’s deserved or not, I don’t know.”
AJ Bell head of active portfolios Ryan Hughes said while previous Rodrigs fans might be tempted to take a look at the new offering, in this climate it has been challenging for managers stepping out on their own to raise money.
“It’s difficult to raise assets however high profile you were and however good your performance is, so that’s going to be a definite challenge for him.”
Questions remain
Few details are known about the circumstances surrounding Rodrigs’ dismissal from River & Mercantile, which he is currently disputing.
But Hollands notes that Rodrigs has started to open up publicly about the issue in question, which he claims centres around his attendance at an industry event. He said potential clients would surely bring this up as part of their due diligence process.
Despite the controversy hanging over Rodrigs, McDermott expects him to be able to raise “a decent sum of assets”.
If Rodrigs had been guilty of a serious breach of trust like market manipulation or insider trading the FCA would not allow him to run money now, he pointed out.
McDermott said he would need to ask Rodrigs some tough questions before investing with him but added his track record at Investec and River & Mercantile “really do put him up in a handful of the best small companies funds”.
Rodrigs was the named manger on the £900m R&M UK Smaller Companies and £375m UK Dynamic Equity funds, and the £120m closed-ended River & Mercantile UK Micro Cap trust.
