Twitter icon Email alerts icon Latest News RSS icon Magazine icon Stay connected:

View the article online at http://citywire.co.uk/wealth-manager/article/a673223

Clash of the listed wealth titans: fund managers’ top picks for 2013

by Danielle Levy on Apr 15, 2013 at 08:24

Clash of the listed wealth titans: fund managers’ top picks for 2013

Listed wealth management companies offer investors the opportunity to benefit from rising markets and tap into the pension market’s shift towards increasing retail investment.

However, with markets up from summer lows and the listed UK wealth and asset management sectors trading on an average of 16 times one-year forward earnings, up from a long-term average of 14 times, according to Numis, some argue the sector is starting to look fully valued.

If this is the case, earnings upgrades will be necessary to drive share prices higher and stock selection is likely to prove even more important.

Backing the Brewin turnaround

Brewin Dolphin is one stock that has offered investors the prospect of participating in a turnaround story, with management two years into a business review that aims to achieve an operating margin of 20% by 2015.

Now on an operating margin of 16.4%, investors are divided over whether the stock can overcome a number of headwinds. These include the planned departure of chief executive Jamie Matheson (pictured), who is to be replaced by David Nicol who joined the company a year ago from Morgan Stanley, alongside the hit from the removal of trail commission post-retail distribution review.

Numis anticipates there could be scope for disappointment over the short term and has the stock on a reduce rating as a result. ‘There appears to be more pressure on the revenue yield than many anticipate (trail income being lost faster than repricing is replacing it with fees due to implementation delays and no major pick-up in commissions, despite better retail investor sentiment) and project delays (so additional costs),’ the company noted.

Nonetheless, Numis expects wider operating margins improvements to be delivered and said board changes could help. However, it highlights ‘significant execution risk’ and describes a short-term turnaround as unlikely.

Citywire AAA-rated Alex Wright at Fidelity does not share this scepticism. He holds Brewin as a 4% position in the Fidelity Special Values trust, and had the stock as a top 10 position in his Fidelity UK Smaller Companies fund at the end of February.

He argues the multi-year turnaround story remains intact and he expects a continuation of the same strategy under the new CEO. Wright still has conviction that over time Brewin’s margins will end up closer to the peer group average, if not higher, and he does not hold any other wealth managers.

Sign in / register to view full article on one page

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: Bringing it all back home


As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

Sponsored Video: Barings on investing in Frontier Markets


From Nigeria to Pakistan and from Kenya to Kuwait, frontier markets are catching investors' attention as never before.

More about this:

Look up the funds

  • Fidelity UK Smaller Companies A Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Royal London UK Equity Income A
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • CF Eden UK Select Opportunities A Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Threadneedle UK C2
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the shares

  • Brewin Dolphin Holdings PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Fidelity Special Values PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Rathbone Brothers PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Ashcourt Rowan PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Brooks Macdonald Group PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • St. James's Place PLC (SJP.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the fund managers

  • Alex Wright
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Leigh Himsworth
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Martin Cholwill
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Leigh Himsworth
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Simon Brazier
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Archive

On the road

Click here to find out more from the Audience Development team.

Sorry, this link is not
quite ready yet