View the article online at http://citywire.co.uk/money/article/a673871
Buxton v Matthews: Schroders swaps one fund star for another
Schroders has poached Philip Matthews, a top-rated manager from rival Jupiter to replace Richard Buson on its UK Alpha Plus fund.
(Update) Schroders may have come up trumps in its search to replace Richard Buxton on its flagship £3 billion Schroder UK Alpha Plus fund.
In a bid to stop more investors following Buxton to Old Mutual, Schroders has poached Philip Matthews from another rival, Jupiter Asset Management. This looks to be a good hire as Matthews currently boasts a top Citywire AAA rating for his three-year record on the Jupiter Growth & Income fund.
The chart below shows Matthews (pictured) has actually beaten Buxton, who currrently has a slightly less impressive Citywire A rating. In the six years since Matthews took over Jupiter Growth & Income he has delivered a 54.7% return compared to 44.5% from Buxton's Schroder UK Alpha Plus fund. Both funds beat the 21.6% average return from funds in the UK All Companies sector in which they sit.
In fact our fund comparison tool shows that Matthews, who will join Schroders in September, delivered a better risk-adjusted return than Buxton over the past five years. Since March 2008 his fund grew investors' money by more (73.6% versus 56.6%) with a lower standard deviation (4.8% versus 6.4%).
Standard deviation is a technical term measuring the amount a fund's monthly returns vary around an average. The bigger the figure the more volatile a fund is. It's one way of indicating risk.
However, longer term Schroder UK Alpha Plus has done better under Buxton (pictured). Our UK All Companies sector stats show over 10 years the fund delivered a total return of 247% placing it 12th out of 180 funds. Jupiter Growth & Income generated 220%, ranking it 32nd.
Stretch back to when Buxton launched the fund in 2002 and he has clearly outperformed the Jupiter fund, which was previously run by Paul Sheehan. His total returns since launch of 224% trounce Jupiter Growth & Income's 139% return over the same period.
Both Schroder UK Alpha Plus and Schroder Growth & Income were recommendations of our Citywire Selection team, although the Schroder fund was put under review when news of Buxton's departure broke. It will likely be reinstated and it may be the Jupiter fund that is put under review until we learn who will replace Matthews. So the wheels of the investment industry merry-go-round turn!
A closer look at the managers show they have different styles, which may influence investors' decisions on whether to hold or fold Buxton's fund.
Buxton launched Schroder UK Alpha Plus to deliver good returns from choppy stock markets. He has typically held between 30 and 35 stocks, with a focus on larger and medium-sized companies. He has not been averse to owning punchy stocks such as the controversial mining company Bumi, and banks such as Barclays, topping up on his position once former chief executive Bob Diamond quit.
In comparison, Matthews has held around 50 to 60 holdings in his Jupiter fund and taken a more defensive approach, focusing on financially robust companies that show high dividend growth.
Ben Willis at Whitechurch Securities said: ‘He's more defensive than Buxton, he’s held up better in down periods, but has lagged in rising markets. He looks for quality companies in undervalued areas.'
He added: ‘I can’t imagine Matthews will try and be a Buxton clone. There’s reason to believe the methodology of that fund will change. Investors might follow Buxton if it’s not looking like the fund they originally bought.'
Mark Dampier, head of research at Hargreaves Lansdown, agreed Schroders was starting again with a good manager who had a different style. However, he favoured Buxton. 'I think that Richard has got more experience and has done a better job.'
Schroders is also hiring Alex Breese from Neptune Investment Management to replace Errol Francis on the Schroder UK Equity fund. Francis is accompanying Buxton to Old Mutual Global Investors in June. This looks like another good appointment as Breese also has a Citywire AAA rating for running the small Neptune UK Special Situations fund .
This has been a busy period for Schroders. Following news of Buxton's departure the group announced it would buy Cazenove Capital to beef up its UK stock market expertise.
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In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.
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- Neptune UK Special Situations C Acc GBP
- Schroder UK Equity Inc
- Jupiter Growth & Income
- Schroder UK Alpha Plus A Acc
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by Michelle McGagh on Feb 22, 2017 at 13:00