Tim Crockford has become the latest high-profile defection from the sustainable investing division at Hermes Investment Management highlighting that competition for ESG and sustainable professionals is heating up.
JOHCM announced on Monday it had acquired Hermes’ four-strong impacting investing team led by senior fund manager Crockford (pictured).
Crockford along with senior analyst Mohsin Ahmad and analysts Maxime Le Floch and Maxine Wille will launch a Global Equity Impact strategy for JOHCM via its socially responsible and impact investment affiliate Regnan which was acquired by its parent company Pendal this February.
The team previously ran the Hermes Impact Opportunities Equity fund, which launched in December 2017.
‘Not all is well’ at Hermes
SRI Services & Fund Ecomarket founder Julia Dreblow notes that Hermes have had a strong track record across the group in the ESG market for many years and were “one of the first asset managers to recognise the longer-term importance of good governance”.
But Dreblow said the impact team’s exit which comes shortly after sustainable investment head Andrew Parry left the business suggests “all is not well there at present”. Parry joined Newton Investment Management in September where he will also be head of sustainable investing.
“Hopefully what will come of this is two companies that know about impact investment – where previously there was only one, as has happened with previous departures.”
A spokesperson for Hermes said it has strong investment teams in place to ensure clients in the Impact Opportunities fund “experience a seamless transition”.
European equities manager Martin Todd and US equities head Mark Sherlock will co-manage the Hermes impact fund until a successor for Crockford is found. Todd will continue to manage the Hermes Europe ex-UK fund with help from James Rutherford, head of European equities.
“We remain fully committed to both asset classes and will continue to assess and broaden our capabilities in line with the needs of existing and prospect clients,” the spokesperson added.
Impact investment professionals are a hot commodity
But Willis Owen head of personal investing Adrian Lowcock sees the departures from Hermes as part of a wider trend of fund groups poaching ESG and impact talent who are now seen as a hot commodity.
“Given the growing importance of ESG themes there are two ways to develop your expertise, you either nurture it internally or you buy it in,” Lowcock said. “The latter is quicker although still requires incorporating the culture into the business.
“I don’t think this is embarrassing for Hermes,” he continued. “It shows that the expertise they have is well regarded, and as this area grows, we could see more teams move as fund managers look to entice them away.”
“It seems like every asset management firm is looking to launch one or more impact funds these days to meet growing investor demand,” agrees Morningstar director of sustainability research for Europe Hortense Bioy.
Managers with track record remain few and far between
And yet Bioy notes the number of managers with a track record remains slim.
The Hermes Impact Opportunities Equities fund managed by Crockford has “performed very well” since inception two years ago and beat its benchmark the MSCI ACWI, she said. It has returned 23.6%, double the IA Global sector’s 12% gains over that timeframe and is second quartile over one year.
Lowcock described the Hermes impact hire as “a good move” for JOHCM. “They get a well respected team which can help grow the company’s focus on ESG.”
He thinks that given Hermes’ firm-wide focus on ESG it should be able to recover from losing the impact team.
“Because Hermes have heritage in this area I expect they will be able to adapt and nurture new talent to replace the existing team even though their departure might cause some disruption in the short term.”
Crockford will launch multi-cap fund at JOHCM
The strategy, due to launch in the second half of 2020, will be a “high conviction, diversified, global multi-cap approach with low portfolio turnover and a strong emphasis on driving impact through engagement,” a press release from JOHCM said.
“This is a highly important strategic initiative for JOHCM and Pendal,” said Alexandra Altinger, JOHCM CEO of UK, Europe & Asia. “The team hire expands our investment capability while enabling us to leverage Regnan’s ESG expertise. It allows us to credibly provide specialist socially responsible products that meet growing client demand for investment approaches that go beyond traditional risk and return considerations.”
Crockford and the trio of analysts will be based in JOHCM’s London office.
Portfolio Adviser reached out to Hermes but did not hear back in time for publication.
