Miton chief executive David Barron has said the boutique fund group’s focus on UK distribution has helped it navigate Brexit uncertainty, despite the fact its equity-heavy range is exposed to political headwinds at home and market volatility globally.
Net inflows more than doubled to £1bn at the fund house in 2018 from £494m in 2017 taking assets under management to £4.4bn at the end of the year, Miton’s full-year results revealed on Monday morning.
Net flows were positive in Q4 2018 when market volatility hit. Flows are neutral year to date, which Barron (pictured) described as a “pretty good outcome” against a volatile market backdrop.
‘We’re a very simple business’
He told Portfolio Adviser: “We’re a very simple business at the end of the day. We manage and distribute a range of UK-domiciled funds to UK clients. We’ve no legacy business, all our funds have been set up really in the last eight or nine years and there’s a straightforwardness to the business that I think is an advantage in these times.”
He wouldn’t rule out future expansion in Europe but said for now the opportunity to take more market share in the UK was significant. Miton’s funds are currently distributed through the UK intermediary market.
“Building a range and distribution capability outside the UK at this time carries quite a bit of uncertainty. Partly because of Brexit, but also just the nature of the investment needed to take market share there relative to what we can do in the UK.”
While market volatility had prompted investors to choose cash and short duration bonds over risk assets, he said intermediaries were still allocating client money toward retirement outcomes and want assets that can deliver long-term returns. “We clearly don’t offer short duration or cash funds but we do offer multi-asset and in our equity funds we look to manage risk and return. Many of our funds deliver good returns but do it with lower levels of return or Sortino ratios.”
He pointed to Miton funds’ top-10 holdings as an example of why they are not direct competitors of many rivals.
Milestone for UK Value Opportunities
Asked to pick funds that are likely to attract flows in 2019, Barron pointed to the European and US fund ranges. The £409m Miton European Opportunities fund, run by Carlos Moreno and Thomas Brown, turned three years old in December, while the £102.6m US Smaller Companies fund is approaching one year old. Its fund managers, Nick Ford and Hugh Grieves, have also run the US Opportunities fund since 2013.
In July, Andrew Jackson celebrates three years leading the £390.2m Miton UK Value Opportunities, which he took over after George Godber and Georgina Hamilton defected to Polar Capital. Barron highlighted that both UK equities and value funds are out of favour at the moment but said the three-year milestone could be a trigger for inflows from intermediary clients.
“We did take assets into the UK equity funds as a whole last year, but I think the UK’s not necessarily a loved market at the moment. You could see there would be a greater interest in international assets at the moment,” Barron said.
He continued: “The UK market on many metrics is looking quite cheap compared to other markets so you could envisage a scenario in which there is quite a big uptick for UK assets – if and when there is any clarity and I’m certainly not calling that.”
There are no planned fund launches on the horizon that he said the group could divulge.
