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Murphy’s departure a ‘blow’ to Schroders, but investors should keep faith

04 June 2024

Experts discuss the departure of the manager and investment case for the fund.

By Matteo Anelli,

Senior reporter, Trustnet

Veteran manager Kevin Murphy will leave Schroders after 24 years at the firm to join his brother Dermot and former Jupiter Asset Management fund manager Ben Whitmore at the newly founded Brickwood Asset Management.

With the move, he will give up his role as co-manager of the Schroder Recovery, Income and Income Maximiser funds. Schroders has announced that Nick Kirrage, who currently leads the global value team, will join Andrew Lyddon and Andy Evans on all UK value portfolios, taking back a position that he held between 2006 and 2022.

A Schroders spokesperson said: “Continuity is key with the transition and succession being meticulously managed on behalf of our clients whose service and investment focus will remain unchanged.”

Performance of fund against sector and index since Murphy’s tenure

Source: FE Analytics

Murphy’s departing has dealt “a blow” to the Schroders team, according to Tom Green, fund analyst at FE Invest.

“This is a blow to the team, as Murphy was one of the founding members of the value team and does a lot of the work around the evolution of the funds process,” he said.

The income fund has a “long-term, successful track-record in value investing” and was recommended by FE Investments for its ability to move into positions quickly when stocks sell off aggressively as well as the team’s contrarian positions, which historically paid off in the long term.

The exit doesn’t necessarily impact these strong points, according to Green, who retained his conviction.

“Other members of the team also work with Murphy and due to the very experienced wider team, we have fewer concerns than if this was a single-manager structure,” the analyst concluded.

Ben Yearsley, investment consultant at Fairview Investing, broadly agreed with Green.

“It's a slightly strange move [for Murphy], as it results in two big beasts of the value jungle [Murphy and Whitmore] together. Maybe the opportunity to work with Whitmore as well as his brother was a big draw,” he said.

“It’s a shame for Schroders, as Murphy and Kirrage have always made an excellent team. But long gone are the days when it was only the two of them – it’s a much broader team now, which will be headed up by Kirrage solely.”

As for how investors in one or multiple products run by the team should react to the news, Yearsley said that “those who were happy holders before have no reason to change that view”.

Also not changing their views were the analysts at Square Mile Investment Consulting and Research, who have an ‘A’ rating on the Schroder Income fund.

Senior investment research analyst David Holder said that while it is “disappointing” that the Schroders team has lost “such a seasoned value investor”, the main effect of the move is to “further enhance Brickwood’s credibility” within the value investing space.

As for the consequences for Schroders, the re-introduction of Kirrage into the team “should very much comfort investors”.

“The three-person sub-team overseeing all UK value mandates is very well placed in terms of collegiate understanding, depth of investment knowledge and experience in this area of the UK market,” Holder said.

“The strength and depth of experience within the team remains cohesive and strong and as such, Square Mile has retained the A rating on the Income fund as well as the Recovery and Income Maximiser funds.”

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.