In the case of Kames, he thinks the departure of Milburn and Roberts is “survivable” but is likely to trickle down into the group’s fund flows.
“I can’t make it a positive, though, I know they tried to do that in the press release. It probably won’t do much for their fund flows for a while.”
Kames is, of course, a much larger entity than Liontrust, managing £44.5bn in assets so one would think it would be easier for them to withstand the blowback from losing managers, fixed income stars or not.
And as Ryan Hughes, head of fund selection at AJ Bell Investments points out, Kames’ fixed income team is in capable hands with Stephen Snowden and Adrian Hull taking over as the new co-heads.
Not to mention, because of the firm’s “excellent reputation building”, the team’s remaining managers “should be well known to many investors”, he says.
Calder also agrees that Kames had already laid the groundwork to be able to survive the loss of Milburn and Roberts.
“At the end of the day, they’ve built a very successful franchise and have hired some very good people so one could argue the heavy lifting has been done in the early days,” he says.
“I don’t see why it would be a disaster from the perspective of an ability to perform in the future.
“The only question we would ask is whether David and Phil were the master decision-makers, pulling the trigger when it came to the macro calls,” he admits.
Though Calder says he “would be surprised if he didn’t see outflows” from Kames after the departure of Milburn and Roberts, he also doesn’t think that means Liontrust will inherit all the business that once belonged to Kames.
“I don’t think you will see money moving from Kames to Liontrust,” he says.
“If money leaves Kames it will go to what is next on your subs’ bench.”
Besides, Milburn and Roberts “start in January 2018 and it will probably take them a few months to get the funds sorted out”, he notes.
“It could be a year before they are back in the marketplace. And by then, you are either comfortable with the managers that replace them or you have gone and done something else.”
The more important takeaway, he thinks, is that people moves “are always good news for the industry because that means there is more choice there”.
For Liontrust, certainly, there will be more diversification on the fixed income side.
As unanimous as investors are about Liontrust’s win, they are equally in agreement about the high profile departure not being a disaster for Kames. Only time will tell.
