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Profile: Beaufort's high-flying CIO on climbing to £2.5bn

Profile: Beaufort's high-flying CIO on climbing to £2.5bn

From getting his pilot’s licence in just 21 days to cramming his investment management qualifications into a single year, Stewart Murray is a man who likes to get things done quickly.

Since joining Kent-based Beaufort Investment Management as co-chief investment officer last August, he has helped oversee the opening of a London office and put in place ambitious plans to grow assets under management (AUM) to £2.5 billion within five years.

Murray joined the firm from Rowan Dartington, where he was head of equities, saying he was impressed by the company’s AUM growth and felt it could be accelerated further.

‘One of the biggest things that attracted me to Beaufort was the assets under management (AUM) growth. It’s been phenomenal and over the past year we have grown from £476 million to £620 million,’ he says.

‘We have aspirations to grow to £2.5 billion and I have some certainty, seeing the flows every month, and we are looking at bringing on board more adviser firms. The figure is a five year target, but from some of the discussions we’re having, it could be a lot quicker.’

Beaufort IM is the discretionary fund management arm of the Beaufort Group, which is not to be confused with Beaufort Securities, a different company that has recently had its permissions suspended by the regulator.

 


As Murray is keen to clarify: ‘We are aware of the situation, although we are not aware of the details, but the Beaufort Group is not in any way, shape or form associated with Beaufort Securities. It’s something we’ve been asked about quite a few times, but our clients know who we are.’

Beaufort Group is technically a network that formed in 2012, overarching 11 adviser partner groups. One of the company’s key growth strategies is to bring on board more adviser firms. Incoming advisers are offered varying degrees of equity, depending on their size, willingness to amalgamate and level of qualifications.

‘Technically we are a network although we regard ourselves as a partnership – we are offering 30% equity to our partners. We are talking to a number of companies and gearing up to become a much more significant player,’ Murray says.

‘We have given 20% of our equity to partners so far and new firms coming in can have a share of the pot. It’s not just based on AUM, we take into account other things, such as if the company rebrands to take the Beaufort name, if they have or are aiming to attain chartered status, their file keeping etc.

 

‘We want firms coming in to be "Beaufortised", so we offer the same level of service and [for them to] use us for the investment management. Others still have their own brand and are standalone, but adopt some of our processes.’

The company has invested considerably in its IT and back office systems over the year. Expenses were up from £1.5 million to £2 million in 2016, resulting in a pre-tax profit of £137,000 down from £399,000. Turnover was up to £2.3 million from £2 million the previous year.

Another planned avenue of growth is through the expansion of Beaufort IM’s investment proposition, based on Murray’s background in running direct equity portfolios. The firm currently runs 42 fund of funds portfolios, incorporating 10 actively managed, 10 enhanced passive, 10 risk-adjusted, 10 ethical and two income funds. These have been overseen by Murray’s co-chief investment officer Stephen Watson. The firm also has an external investment governance committee, which includes 7IM CIO Chris Darbyshire and Bill Dinning, former head of investment strategy at Kames Capital.

‘It’s very broad we don’t direct where the client ends up, that’s up to the IFA,’ Murray says.

‘What’s attractive about the proposition is its performance, which has been exceptionally strong, and we have a compelling fee structure.’

 

The firm’s actively managed medium risk Equip Portfolio 5(S3) is up 24.1% over three years to 23 February. Although the fund is not benchmarked against the Investment Association’s Mixed Investment 40-85% sector, the comparison seems fair, with the peer group up 24.3% over the same period. Over five years the fund is up 51.34% versus 47.6%.

Although Beaufort was only established in 2012, the funds’ track records date back up to 12 years with the proposition moving over from chief executive Andrew Bennett's previous firm. Launching direct equity funds is a departure for the firm, but a move that Murray believes will benefit their end clients. The first fund, expected to go live in the middle of the year, will be a concentrated UK multi-cap equity portfolio run by Murray.

‘We are not looking to stop at the UK and we will launch additional sub-funds, with Europe the obvious next choice. Hopefully we’ll be starting with £30 million – we need to get it to critical mass and grow from there,’ he says.

‘One thing we are struggling with is the multiple layering of costs and we are trying to address that. Direct equity was a natural evolution and a requirement for high net worth individuals.’

 

Running direct equity portfolios takes Murray back to his roots in the industry. He changed his original plans to pursue a medical career after a summer internship with Edinburgh-based investment boutique, Walter Scott & Partners, saying he realised then that ‘I knew that I wanted to manage money in the stock market’.

Keen to fast track his career, he went on to do an MSc in investment analysis at the University of Stirling.

‘I was advised that I needed to get myself on a course that was going to get me my fund manager qualifications,’ he says. ‘At the time it was the only course in the UK that enabled me to fast-track the three years into one.’

After graduating he joined boutique equity house Blue Planet Investment Management, where he went on to run three of its investment trusts then had a brief stint at Royal Liver Asset Managers before moving to Munros Capital Management in 2007, where he experienced the highs and lows of asset management.

‘We then had the credit crunch, which was unfortunate because despite our phenomenal performance we lost our two largest clients in a week, which brought the company to its knees,’ he recalls.

 

‘You never expect to lose clients when you are top decile, but they reallocated the money – one went to passive and the other went to large cap. The old adage is that you live and die by your performance, but the firm died despite its performance. That was the reason for me moving to London.’

Spells then followed at Vintage Asset Management, Ashcourt Rowan and Rowan Dartington, the latter of which he left after it was acquired by St James’s Place, as he was concerned that the new parent preferred the unitised route over direct equity.

Although Murray is very grounded as an individual, one constant throughout his career has been his love of speed, both on the ground and in the air.

‘Getting a pilot licence probably takes about a year, but I did it in 21 days on a fast-track course in the US in 2004 – you have less problems with the weather in America,’ he says.

‘They’re not as expensive as people think. It’s not a Cessna or a Learjet, it’s a single propeller plane. You can buy one for £30,000-£40,000, so similar to a car and the cost of running a plane is less than most luxury cars. I generally fly around 20 to 30 hours a year to keep my licence up.’

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