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Mattioli Woods leads listed wealth managers – can its rise continue?

Mattioli Woods was the standout performer among listed wealth managers last year and is already well ahead of the pack in 2014. It is being tipped to continue on its stellar trajectory.

The company’s share price rose by 84% in 2013 and year-to-date it has surged by a further 20.92%, outstripping the FTSE All Share’s miserly 0.17% gains.

City Financial UK Opportunities manager Leigh Himsworth is backing the stock, viewing its expansion plans as a positive.

‘We still hold the view that interest rates will remain low for a long time, and the reverse will be that personal rates of taxation will remain elevated, something wealth managers are in a good position to benefit from,’ he said.

‘We’re in Mattioli Woods because we love their management team and the acquisition they did with [Newmarket-based IFA] Atkinson Bolton [in July 2013].’

He also backs the addition of Atkinson Bolton director Simon Gibson to the existing Mattioli team, which he said further strengthens the company’s board. ‘It’s a great combination, albeit a bit off the radar. Mattioli has generated some very attractive returns, particularly through its nice little niche in smaller company pension funds.’

Mattioli Woods said in January that it is aiming to convert £400-£500 million of advised assets held within its historic subsidiaries onto its discretionary platform.

Among the bigger players, Brewin Dolphin and Charles Stanley continue to find favour, despite mixed years for both companies. Charles Stanley issued a profit warning in April, which was a major driver behind its share price falling by 15.8% year-to-date, while Brewin’s share price has managed to marginally outperform the market, up 1.34%, despite announcing a £32 million tech writedown.

Toby Gibb, investment director for UK equities at Fidelity, expects further upside for Brewin, pointing to plans to boost margins.

‘Brewin Dolphin has a strong market position in an industry that is growing, thanks to demographics, pension reform and consolidation. We remain positive on the name,’ he said.

‘Management appear to be on track to achieve their 25% margin target and are focused on delivering top line growth through organic inflows.’

Himsworth favours Charles Stanley, backs its management team and believes the firm’s move into the direct-to-client platform business with Charles Stanley Direct could be ‘life changing’.

Elsewhere within the listed wealth management sector, St James’s Place (SJP) continues to be widely held. Its share price surged by 73% in 2013, second only to Mattioli Woods in performance terms, and it is up 5.91% year-to-date.

Julian Chillingworth, chief investment officer at Rathbones, remains a long-term investor in SJP, and Hargreaves Lansdown, which he expects to consolidate their strong positions in the sector. Both have been beneficiaries of the retail distribution review (RDR) he said, and are well positioned to benefit from the chancellor’s pension reforms.

‘It is too early to know how the changes are going to impact on their businesses,’ he said. ‘However, I do think that in both cases the changes in RDR have now filtered through and are being a positive driver for new business for them.

‘We’ve done very well out of these, and continue to like them. Our view is that you can participate in most of these industry trends best through the larger names.’

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Leigh Himsworth
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