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Core beliefs

Brown Shipley is another private bank with a near-200-year history of managing client money, with the firm celebrating its bicentennial in 2010.

Originally starting in Liverpool, the firm established a London operation in 1863 and still remains in the same Lothbury headquarters.

Moving through the years, it was acquired by European bank KBL in 1992 and subsequently went on to make its own purchases, including stockbroker Cawood Smithie, pension firm Fairmont Group and private client investment manager Henry Cooke.

The latter brought several unit trusts into Brown Shipley and the range subsequently known as Solus grew out of these Arkwright-branded portfolios.

Initially, the firm split off this brand and also served as ACD for the funds but eventually outsourced this latter function to IFDS earlier this year.
At the same time, the Solus brand was dropped and the portfolios now trade under the original Brown Shipley banner.

This range was originally close to 20 funds and the group has gradually cut this down over subsequent years to focus on areas of core strength.
It rolled several fixed-income portfolios into a single sterling bond vehicle, for example, with manager Kevin Doran generating strong long-term performance with his unique approach.

In short, he looks to be among the top decile of income generators within the IMA’s corporate bond sector while seeking to preserve capital over the course of a complete interest rate cycle.

The range dropped to eight funds in 2005, with the firm also closing various small funds, including a sub-£1m US offering, and has since come down to five. One significant divestment was the Eastern Enterprise fund, sold off to Premier in 2005.

Brown Shipley’s marketing strategy director Peter Collier says this management of the vehicle was outsourced to Singapore and this came to be seen as an unnecessary regulatory risk for a small firm. “We made it very clear at the time that the move was not done on performance grounds but for a boutique firm, having a high-profile fund run several thousand miles away is not easy,” he says.

Of the remaining five funds, three are multi-manager run by CIO Peter Botham and Michael Clarkson. As part of the August re-organisation, Brown Shipley altered one of these mandates, turning the balanced fund into an income mandate.

According to Collier, this was in direct response to client needs for income and the vehicle now sits alongside the growth and international multi-manager offerings.

Meanwhile, Brown Shipley also merged the small UK special situations into UK flagship, with the latter run by John Smith and representing the group’s investment process for discretionary clients. There was significant overlap between the funds, with five of the top 10 holdings in common at the end of March.

This merger marked the end of an illustrious history for the special situations fund, which was once run by Axa Framlington’s Nigel Thomas early in his career.

Collier says: “In reality, we are not equipped, either financially in terms of back office, to be slugging it out with large firms in the retail market and we have tended to focus on high-net-worth clients for the most part. We have a retail presence but recently upped the minimum investment levels across our funds from minuscule monthly amounts to £3000 to reinforce this position.”

In addition to investment, Brown Shipley also covers areas such as pensions and inheritance tax planning and prides itself on a personal approach to wealth management.

While the group markets its funds to external investors, they are seen as an entry for clients with insufficient assets to warrant a full discretionary portfolio.

Collier also draws attention to the group’s strong investment policy committee and believes Brown Shipley has long punched above its weight on the research side, with a UK team plus KBL’s substantial Europe-wide network.

He says: “Across the group, our strategy has always been sticking to what we are best at, which is why the fund range has focused down over the years.”

“We obviously focus on performance but various surveys have shown clients value relationship and trust higher in their private bank and Brown Shipley has always tried to deliver that through our personal service.”

The firm has around £2bn in assets under management within its investment divisions.

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