Some FE Trustnet readers have expressed concern over the proposed merger, which was approved by shareholders of Cazenove earlier this month.
FE Alpha Manager Julie Dean and Paul Marriage are among the most popular fund managers in terms of inflows in recent months, and Robin McDonald, Marcus Brookes and Matthew Hudson in particular have been tipped as stars for the future.
While Schroders itself has a stable of high profile managers, Cazenove’s Robin Minter-Kemp (pictured right) and Schroders’ Robin Stoakley say investors can expect the incoming managers to have full independence.
“The emphasis of this sequence has to be continuity. This is the key consideration,” said Minter-Kemp, head of investment funds at Cazenove. “The maintenance of the approach that has borne such strong performance has to be the priority.”
Minter-Kemp says the openness of the Schroder team has been well received by the fund managers at Cazenove.
“They were very thoughtful in their approach, which has been a key attraction for our managers,” he explained.
He points out that the managers’ teams won’t be impacted by the move, because they all use external analyst teams.
“Since 2002, the managers took the decision to use external managers rather than in-house,” he said. “They didn’t want to be districted by a team, and wanted to have free reign to get the specialists in many areas. As a result, the move won’t impact them in this regard.”
Minter-Kemp says fund mergers would be hugely unlikely, something that Stoakley (pictured left) – head of UK intermediary business at Schroders – agrees with.
“The Cazenove Capital funds and strategies are very complementary to Schroders. Our priority is transferring these funds as part of the combined business,” he said.
“For example, the Cazenove UK Equity Income fund run by Matt Hudson will continue as it is a different style to the existing Schroders fund, which is deep value. The Cazenove fund has a focus on a combination of capital growth and income.”
Kevin Murphy and Nick Kirrage, who run the Schroder Income fund, use a strict value approach when picking stocks. Murphy explained his process in an interview with FE Trustnet last month.
Hudson outlined his investment approach in a recent video interview.
Stoakley says that Brookes and McDonald will head up the multi-manager team at Schroders, but says that Cazenove’s business cycle team, which includes Dean, Hudson and Chris Rice, will report to Peter Harrison, head of global equities at Schroders.
“Marcus and Robin will run the multi manager business as they have a market leading franchise,” he said.
“The Cazenove Capital equity fund managers will remain together, reporting to Peter Harrison, Schroders’ global head of equities.”
Minter-Kemp added: “I can’t imagine Robin and Marcus not heading up the team given the experience they have in this field.”
“Schroders are buying a skill set that they don’t have in certain areas. We don’t see the philosophy that we have as in any way being a duplication of what they have.”
On the relationship between small-cap heavyweights Marriage and Andy Brough, who heads up Schroder UK Smaller Companies and Schroder UK Mid 250 funds, Stoakley said:
“We believe that these funds can run alongside each other.”
Minter-Kemp added: “Paul Marriage and Andy Brough are very different. There’s no reason why they can’t share research, but the way they pick stocks is very different. One is more focused on small to mid caps [Brough], while the other is more focused on micro caps [Marriage].”
Performance of managers over 10yrs
Source: FE Analytics
Marriage will also report to Harrison, who before joining Schroders in 2010 was chief executive of hedge fund firm RWC Partners.
On the issue of cost, both Minter-Kemp and Stoakley say there will be no immediate effect on the ongoing charges figures (OCFs) of the Cazenove funds. However, Minter-Kemp says there could be developments in the future.
“The last thing we want to do is alienate investors with changes to pricing, given that we’ve already got so many problems with RDR,” he said.
“There will be alignment, and there will be conversations about ring-fencing the individual products.”
Though Minter-Kemp points to the “meteoric growth” of some of Cazenove’s funds, including the multi-billion pound Cazenove Multi Manager Diversity and Cazenove UK Opportunities funds, he says they will benefit from Schroders’ superior client-book.
Minter-Kemp says that confirmation of the merger is unlikely to happen until next year.
“We have a court hearing on 2 July this year, and after that we still need it to be approved by the regulators,” he said.
“I don’t think it will be finalised this year.”