Make no bones about it Buxton’s defection is a significant signal of intent from Old Mutual Global Investors, and a huge blow to Schroders’ domestic business – despite its statement today that UK assets make up less than 5% of its total global assets.
Since joining Schroders from Barings 11 years ago, Buxton, as head of UK equity, has built up an enviable franchise fronted by his UK Alpha Plus Fund which to date has amassed some £3.6bn in assets under management.
Since launch in June 2002 the fund has returned close to 300% on a total return basis, according to FE Analytics. This is threefold the performance of the FTSE All Share and UK All Companies average.
This includes underperformance in the downturns of 2004, 2008 and 2009 and 2011, as expected. On the flip side, outperformance during market rallies has been exceptional – as witnessed in the past six months.
Renewed appetite for equities
In some ways then, this is great timing from Old Mutual given the FTSE 100’s 5-year high and predictions that it may even breach the 7,000 mark. There has been a sea-change with a renewed appetite for equities in general, even if the road ahead turns out to be not quite a smooth as some may expect.
I remember attending a Schroders intermediary conference back in 2009 when, despite the prevailing gloom around the UK economy and markets, Buxton was still the star attraction. Intended as an intimate break out session, his presentation was greeted with a wall of investors jam-packed in to hear his views.
Old Mutual has already been utilising Buxton’s skills to an extent anyway – he runs its £160m Equity 3 Fund on a sub-advisory basis (soon be renamed as UK Alpha Fund).
It’s worth pointing out here that the group already has its fair share of respected UK equity managers – Simon Murphy, Dan Nickols, Richard Watts and Luke Kerr – though with Ashton Bradbury on board it has always been more associated with expertise in the mid and small cap sectors than generalist UK investing.
Big shoes to fill
This appointment, at the same time as Old Mutual Asset Managers’ integration with Skandia Investment Group, signals the rebirth of a very substantial player in the UK retail marketplace.
For Schroders, it’s easy to forget that UK Alpha Plus is one of a suite of nine retail-focused UK equity funds, so chances are it will be handed over to one or more of the existing team, possibly Ed Meier or Sue Noffke. Buxton’s are big shoes to fill though.
As fund commentators have been quick to point out, there’s no advantage in Buxton’s investors making a rash decision now whether or not to sell – he’ll be staying at Schroders until June. It is at least worth waiting to find out the firm’s future plans for UK Alpha Plus.
In an age when investors are increasingly tilting portfolios away from the domestic market towards high growth regions, such as Asia, it is encouraging to know that the movements of one fund manager can still cause such a stir. Still, Richard Buxton has never been Mr Average, in both performance and profile.
