A number of them have star managers - usually the ones with the longest and strongest track records who not only run the largest pool of money, but are also instrumental in attracting more assets.
However, if they were to move on or retire, it could cause serious headaches.
The most recent example of this was when Neil Woodford announced last year that he would be leaving Invesco Perpetual after 25 years’ service to start his new venture, Woodford Investment Management.
Given his track record and the billions he ran, many investors questioned how the group would fare without him.
However, though Invesco has had to deal with quite significant outflows and it is still very early days, a recent FE Trustnet article highlighted that the group has coped with the situation well.
In this article, we ask Ben Willis, head of research at Whitechurch, which other groups would be dealt a severe blow if their star manager were to leave for whatever reason.
Alastair Mundy and Investec
Alastair Mundy, with his contrarian style, is probably Investec’s best-known manager and as well as running institutional mandates, he manages the £1.2bn Investec UK Special Situations fund, the £2.7bn Investec Cautious Managed fund and the ever-popular Temple Bar Investment Trust.
Willis says that as Mundy is head of value at the group and has such a retail following, if he were to leave, it would put Investec in a difficult situation.
“He runs a number of mandates at Investec and is in charge of a lot of money. When you think of Investec, Alastair Mundy is the manager you would focus on so I would say he is a good example,” Willis (pictured) said.
Mundy has a strong track record. According to FE Analytics, his Investec UK Special Situations fund has been a top quartile performer in the IMA UK All Companies sector since he took charge in August 2002 with returns of 227.27 per cent, beating the FTSE All Share by close to 50 percentage points.
Performance of fund vs sector and index since Aug 2002
Source: FE Analytics
The fund has beaten the All Share in eight out of the last 11 calendar years. His Investec Cautious Managed fund and Temple Bar Investment Trust have also considerably outperformed since 2002, when he took over the two portfolios.
Mike Deverell, investment manager at Equilibrium, agrees that it would be a “big concern” if Mundy were to leave. However, he says it would be strange if his departure were to cause outflows as Mundy’s process is ingrained in the funds and he has built a team of like-minded individuals around him to implement it.
Investec was unavailable for comment.
Nigel Thomas and AXA IM
Sticking in the UK, Willis says AXA IM will be in an unenviable position when FE Alpha Manager Nigel Thomas eventually retires.
“I know they have quite a large UK equity desk and have been promoting a number of UK managers recently, but I would fit Nigel Thomas in that category. When you think of UK equity managers at AXA, you don’t really tend to look beyond Nigel Thomas,” he said.
Thomas’ £4.5bn AXA Framlington UK Select Opportunities is one of the most popular UK funds with investors and is the group’s only IMA fund with AUM of more than £1bn, according to FE data.
It has been one of IMA UK All Companies sector’s best performing portfolios over 10 years with returns of 193.08 per cent, beating its FTSE All Share benchmark in the eight out of the last 10 calendar years.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
Given that Thomas has a successful career spanning back to the 1980s, you couldn’t blame him if he were to start thinking about his own retirement and a spokesperson for AXA IM says the group is already planning for the future of their largest fund – even though there is no suggestion this is on the cards.
“We take succession planning seriously and have long-term plans in place to ensure smooth transitions,” the spokesperson said.
“While Nigel has no imminent plans to retire, we have succession plans in place with Chris St John lined up to take over.”
“Nigel and Chris already work closely together – Nigel is the deputy on Chris St John’s successful AXA Framlington UK Mid Cap Fund – and they are both supported by the strong and stable UK equities team which has over eight years’ experience working together.”
Carl Stick and Rathbones
Carl Stick (pictured) runs a significantly smaller pool of retail money than Mundy and Thomas, but Willis says his five crown-rated Rathbone Income fund, which is £871m, is key to the business.
The fact that he has been at Rathbones since 1996, sits on the board of directors and is instrumental to the group’s investment process and business development means his departure would leave it with a large hole to fill, according to Willis.
“Rathbones are trying to broaden their fund range, but Carl Stick is still their most well-known manager and his Income fund is still the main offering from the group,” he said.
Prior to the financial crash, Stick had been one of the biggest names in the UK equity income sector.
Though the fund was hit hard during the downturn due to the manager’s over-exposure to highly geared companies, it has still been the best performing portfolio in the IMA UK Equity Income sector since he took over in January 2000.
Performance of fund vs sector and index since Jan 2000
Source: FE Analytics
Mike Webb, chief executive at Rathbones, says Stick is a very important member of Rathbones, but the group has a very team-orientated approach.
“Notwithstanding the fact that Carl is a highly regarded and valued fund manager, he is supported by a team of talented specialists who are well acquainted with, and have contributed to, the fund’s investment process.”
“It is this process which ultimately underlines the success of the fund. In addition to building a team around Carl, our approach has always been to create an environment which encourages fund managers to remain with us.”
Angus Tulloch and First State
Angus Tulloch is one of the best-known fund managers available to UK investors and as head of Asia Pacific equities at First State, he has been pivotal in making the group one of the most recognisable emerging market fund providers.
FE Alpha Manager Tulloch (pictured) currently heads up the top performing £6.9bn First State Asia Pacific Leaders fund, the £734m First State Asia Pacific fund and the Scottish Oriental Smaller Companies Investment Trust as well as institutional mandates.
He has managed the team since the late 1980’s and Willis says that First State will be dealt a hefty blow when its key man does retire.
“Angus Tulloch will retire at some point and I’m sure that First State will have contingency and succession plans in place. However, he is their most well-known manager and it would be a real challenge to find his replacement,” he said.
According to FE Analytics, his two open-ended funds have been the two best performing portfolios in the IMA Asia Pacific ex Japan sector over 10 years and have comfortably beaten their benchmark over that time.
Performance of funds vs sector and index over 10yrs
Source: FE Analytics
A spokesperson for First State says that while Tulloch is incredibly important to the group, the success of its funds has been built around a strong team.
“The team now consists of around 30 investment analysts with portfolio management responsibilities already appropriately spread across the highly capable team. Succession planning is clearly always important in the best interests of managing our clients’ money,” they said.
First State does have a number of other FE Alpha Managers such as David Gait, Martin Lau and Millar Mathieson.
