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IFA verdict: Schroders reveals replacements for Buxton and Francis

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Advisers are split on the replacement for Schroder’s star manager Richard Buxton and Errol Francis, with some seeing similarities between the manager’s styles and performance but others doubtful that this will stop outflows following Buxton.

Jupiter’s Philip Matthews and Alex Breese from Neptune are set to take over the running of the UK equity funds currently helmed by departing managers Richard Buxton and Errol Francis.

Matthews, who manages the £366m Jupiter Growth & Income fund, will run Buxton’s £3.1bn Schroder UK Alpha Plus fund. Breese has been named as manager of Francis’ £626.2m Schroder UK Equity fund and the £181.2m Schroder ISF UK Equity fund. He is currently Neptune’s head of UK equities and manager of the £33.9m Neptune UK Special Situations fund.

Whitechurch Securities investment manager Ben Willis is confident of the two manager’s track records as replacements for Buxton and Francis, and describes the appointments as a “good hire” for Schroders.

He says: “The track record of Philip Matthews, which we’ve been looking at since the news broke, stacks up very well against Buxton. He has obviously got experience investing in UK equities, particularly with a focus on large equities as well. From that point of view it is almost a like-for-like fit.

“People will be surprised because Alex Breese is not that well known a name, but he has been at Neptune for quite some time. He delivered very good returns over most time periods since he’s been there but for some reason he hadn’t really gained the high profile he probably wanted from actually producing those numbers. So I think this is a solid hire as well.”

Chelsea Financial managing director Darius McDermott agrees the appointments are “quality hires” for Schroders and says that the UK Alpha Plus fund remains a hold for Chelsea for the immediate future.

He says: “Both managers have very good track records and their five year numbers are in fact better then those of Richard Buxton. Alex Breese is a manager we have previously tipped as an up-and-coming manager, Philip Matthews we know less well. Neither manager has the same gravitas as Buxton, but they are sound replacements for the funds Richard and his deputy ran.

“We will be keeping Schroder UK Alpha Plus on a ‘hold’ pending a meeting with Philip Matthews, but we definitely don’t think there is any reason for investors to panic. The hire is positive and Schroders are making every effort to really bolster up their UK equity team.”

However Addidi Wealth director Anna Sofat believes that emotionally driven investors could choose to fold on the Schroders’ fund, irrespective of the new appointments.

She says: “While the funds do operate in similar spaces, the way the fund is managed will change. You can’t hope to replicate Buxton and I don’t think they should try to, they should be able to put their own stamp on the fund.

“It is difficult enough to find star managers and then when they eventually leave you find yourself in a dilemma, do you stay or do you leave? Emotionally people follow star managers, so I expect a lot will go. However those investors who base it on performance will probably stay and give it a go.”

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Ben Yearsley

Charles Stanley head of investment research Ben Yearsley is also doubtful that the new hires will stop outflows following Buxton out of Schroders.

He says: “They are decent hires but they are not Buxton. I think they are probably good long-term hires for Schroders but I don’t think they will stop all the outflows.  It is going to be a gamble bringing two different managers together from two different fund houses.”

Murphy Financial associate partner Adrian Murphy is skeptical that the new appointments will have much impact as a replacement to star manager Buxton. He says: “It is a very difficult position Schroders find themselves in. Managers like Buxton don’t move much, so how a fund house starts to fill those boots I don’t know. I wouldn’t imagine the appointments are going to particularly change investors’ minds in the short term.

“Also In some ways there can be no comparison between fund managers from and IFA point of view because, you’re not going to know about the internal processes that go on at each of these fund houses and on each of the funds, so what someone’s performance is based on in one fund group doesn’t always translate across.”

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