Five Investec fund managers including Jeremy Rigg have left the group suddenly after clashing with chief executive Hendrik du Toit over increased pay demands.
UK blue-chip manager Rigg, global free enterprise manager Nick Mottram and UK opportunities manager Michael Rimmer left the group last week along with analysts Chris Carter and Nigel Dutson.
They had been pushing for equity stakes on a product level to bolster their revenue share but du Toit rebuffed their demands, arguing that they were incompatible with Investec's business model.
The managers' funds have been taken on by the remaining members of the group's 4 factor equity team, which adheres to an investment process based on automated quantitative techniques. Christine Baalham will take over the blue-chip fund, UK smaller companies manager Dan Hanbury will run the UK opportunities fund while Mark Breedon will take control of the global free enterprise portfolio.
IFAs say the fact that the replacements have been using Investec's investment process and are familiar with the funds should help the transition process but they are unhappy at so many high-profile managers leaving at the same time.
Hargreaves Lansdown senior analyst Meera Patel says: “The 4 factor process is responsible for much of the performance. If it wasn't for that, Investec would not have a leg to stand on.”
Du Toit says: “Clearly, this is a disappointment but the managers' demands are not compatible with our business model. Great businesses are never built on compromised foundations.”