As with a Cluedo game working out who did what with who and in which room is the more light-hearted element of fund manager moves.
Recap
It kicked off mid-March with the shock announcement Buxton was leaving Schroders to go to Old Mutual Global Investors.
Within a couple of weeks Schroders had mustered a credible back-up plan in the shape of Philip Matthews from Jupiter and Alex Breese from Neptune joining them in July and October respectively. Now Jupiter has promoted from within with Chris Watt taking on the Jupiter Growth & Income Fund and Jupiter UK Alpha Fund from Matthews.
As a side line Jupiter has also promoted Alastair Gunn to manage the Jupiter High Income Fund from 1 July when Anthony Nutt steps down. His retirement was announced earlier in the year. Alastair Gunn’s three-year performance compared with his peer group is shown in the chart below.
true
Promote or poach?
When a key manager moves, at the simplest level, asset management firms have one of two choices – promote from within or bring in talent from elsewhere.
In the process of researching an article for Portfolio Adviser’s May issue, hitting your desks soon, I have learned the bulk of fund pickers prefer their clients’ money to follow fund managers out of the door.
There are a variety of reasons behind this, but it boils down to the fact any new set-up at the firm need time to bed in.
A new culture, team and CIO can be a lot for a manager to get used to – think of the last time you started out in a new job – and if the investment process is also different you can bet it will take them a while to get their performance in line with the last fund they run.
Power to command
For managers of Buxton’s reputation this may be less of a problem, since he has built up such faith in his investment process it would be a shock for him to change it.
Sergio Trigo Paz, who left BNP Paribas in the summer of last year to join BlackRock as head of EMD with his six-strong team going with him, said for him it was crucial to move to a company which would allow his process to stay intact.
But since EMD has become a hot asset class and one that many fund groups have under-provided for, good fund managers have been able to command their own terms. This will not always be the case and in a lot of companies it will be “my way or the high way”.
For this reason perhaps an internal promotion is less worrying for the fund group, particularly if the manager has been at the company for a great deal of time and moved up the ranks accordingly.
Watt’s pedigree
Watt is such an example at Jupiter, having joined the firm in 1999 and worked as part of the fund management team since 2000, principally on the UK equity desk.
He was deputy manager of the Jupiter UK Alpha Fund during Ben Whitmore’s tenure, before being appointed manager of the Jupiter Responsible Income Fund (previously Jupiter Environmental Income) in 2007. During the past three years the Jupiter Responsible Income Fund has delivered 40.2% against 33.6% from the IMA UK Equity Income Sector. Below is his three-year performance versus his benchmark.
true
John Chatfeild-Roberts, CIO at Jupiter, says one of the company’s great strengths is its depth of fund management talent. He adds that it was “pleasing to be in a position to ‘promote from within’ two managers who have demonstrated their ability to deliver outperformance over the medium to long term”.
For Old Mutual Global Investors, and subsequently Schroders, poaching from outside their internal pool of talent was (for whatever reason) deemed the preferable choice.
Got it together
If it is believed to be right for investors to bring somebody new into the team then it is absolutely the best thing to do, but I am inclined to agree with Chatfeild-Roberts on the merits of promoting from within.
To the outside world it looks as if you had a plan in place all along, and for those who step up it gives them a feeling of career progression and motivation to succeed.
As anyone who has awaited promotion knows, waiting for the old guard to step aside can be a long and drawn-out process and can lead to a loss of good people if it rumbles on too long.
I applaud Jupiter for rewarding Watt and Gunn, although I will give them some time to get settled before putting my money where my mouth is…
