Rathbone Unit Trust Management’s multi-asset business is one of the key growth areas of the business, according to the its chief executive Mike Webb.
Webb said most investors are moving to multi-asset strategies, which he admitted was a relatively small part of Rathbones' business at at the moment but was poised for significant growth.
David Coombs and his team run the Enhanced Growth, Strategic Growth and Total Return portfolios.
Webb criticised the IMA’s mixed investment sectors, which indicate a risk profile is solely determined by the degree of equity exposure and said risk-targeted funds would attract large inflows over the next three to five years.
Equity exposure not the only factor
He said when “the bond markets eventually crack” many existing multi-asset strategies would risk falling apart and raised questions over their ongoing suitability against risk profile.
He said against the “mountain of regulation”, as a CEO he spends half his time filtering through the red tape imposed by the FCA and regulators around the world that impact the asset management business.
The inducements paper recently published by the FCA was one case in point which he said flew in the face of the basic principles in which business was conducted in all walks of life.
“While I have no doubt the regulator is trying to do the right thing they have once again gone to the nth degree and have pulled out their sledgehammer,” he said, adding the inducements rules were seemingly brought to a head to tackle “certain life companies who spent rather a long time not really behaving properly” and now the rest of the industry was being forced to over-administer on basic dealings with clients that goes against the natural course of business.
“It's called networking, and we work in a people business – it's essential.”
Risks of too-fast fund growth
With roughly £2bn in AUM at the moment, Webb was confident he could grow the business to at least twice that over the coming years through the quality of the managers the group was fortunate to have, and thanked his fund managers, such as Carl Stick, David Coombs, Bryn Jones for remaining loyal to the business.
He also warned of the risks of fund manager overconcentration, where huge inflows hit funds seeing assets swell too quickly.
“If a fund goes from £500m to over £2bn in a relatively short space of time, I think you have to ask whether the fund manager can cope with that new level. And they are almost certainly not managing the fund in the same way.
“I would question whether many fund managers' three to five-year performance will be repeatable when those numbers were achieved through running money in a certain way that was longer possible because their portfolio was now twice the size it once was.”
