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Will 2013 star manager exits spark new boutique trend?

by Danielle Levy on Dec 09, 2013 at 09:47

Will 2013 star manager exits spark new boutique trend?

Graham French is the most recent high-profile manager to step down from the £4.3 billion M&G Global Basics fund, topping a remarkable year for star manager departures.

The list goes on but obvious names to include are Neil Woodford (pictured) of Invesco Perpetual’s decision to launch his own firm, while Richard Buxton’s move from Schroders to Old Mutual meant that Citywire AA-rated Philip Matthews was poached from Jupiter by Schroders, alongside AA-rated Alex Breese from Neptune.

Meanwhile, veteran Anthony Bolton also took the decision to retire alongside Philip Gibbs. While the motives behind the major manager moves of this year vary, it is perhaps no coincidence that they all ran substantial pots of money, living and dying by their reputations.

Chris Rice and Tim Russell are two fund managers who opted to go down the boutique route, with plans to launch an investment trust which will have a stake in their new asset management venture Sanditon. As pressures mount on those running behemoth funds, could others follow suit?

While Rathbones head of fund research David Coombs views the high frequency of high-profile manager moves as a coincidence, he argues it nonetheless highlights the tensions that can form between talented fund managers and their distribution teams.

With this in mind, he says we could expect to see a more pronounced trend of managers with solid track records moving to boutiques to avoid distribution pressures.

‘I think there are some funds that have grown very big. There probably are creative tensions between the fund managers and distribution arms of the business, and they [the fund managers] are suddenly running too much money,’ he said.

‘This brings pressures and interference and it would not surprise me to see some fund managers who have got a lot of experience and value in their name saying, “I would like more control over what I am doing”. 

‘You could see a move to boutiques as fund managers feel they can’t be as active as they used to be. I would not be surprised to see more fund managers leaving next year.’

He added a concentration in fund buying could be behind the trend, causing large funds to get even bigger.

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