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John Johnstone

If the Scottish financial community is a headhunters&#39 jungle, none comes as a bigger poach than John Johnston who has just resigned from fund manager Murray Johnstone.

The colossus of smaller companies asset management is leaving Murray Johnstone in November to set up anew operation in Glasgow for LeggMason Investors, formerly Johnson Fry.

The headhunters have had rich pickings in asset management recently, with the departure of Swip&#39s star Orie Dudley and many other top fund managers. This has led to many a statement that organisations rely on star fund managers at their peril.

But John Johnston is a star fund manager of the old school. LMI says it has been inundated with calls from IFAs wanting to know how soon they can invest in his new fund.

Johnston has made excellent returns on the £113m Murray Enterprise and £37m Murray TMT investment trusts. According to Standard & Poor&#39s Micropal, £1,000 invested a year ago would now be worth almost £2,300. Johnston says: “Let&#39s just say our success has not been an accident.”

The morning of the announcement of his resignation saw shares in Murray Enterprise take a 10 per cent dive. Will the money follow him to LMI? Johnston remains cautious. “That is not for me to decide. The board will take decisions in Murray Enterprise shareholders&#39 interests.”

His departure fuels speculation on Murray Johnstone&#39s future. It is up for auctionafter its US-based owner United Asset Management was bought by Old Mutual. Murray Johnstone has £42bn in funds under management.

Britannic Asset Management and Edinburgh Fund managers have been linked with bids for Murray Johnstone but most current speculation rests with Aberdeen Asset Management.

Such is Johnston&#39s profile that the deadline for bidders was brought forward from the middle of September to last week. It was believed his resignation would damage the company&#39s price.

Joining Johnston at the new LMI office is his current deputy Andrew Gray and dealer William Preston. This is not the first time Johnston has moved with his team. When he moved to Ivory & Sime, his colleagues went with him.

He says: “When you are going in to a strange environment it is good to have people you know with you. We have been doing a lot of things well and our track record at Murray Johnstone speaks for itself. With everything that has been going on at Murray Johnstone, some people might have started to focus more on theirjobs than their portfolios. I am really proud of the way my team have focused.”

Johnston says the opportunity LMI offered him was the overriding reason for leaving Murray Johnstone.

But the revenue-shar-ing agreement Murray Johnstone has with its owner, UAM, was certainly a bone of contention among staff. “Over the years, the Murray Johnstone brand has suffered because of a lack of investment and problems with keeping staff and not being able to hold on its revenue,” says Johnston.

The impending sale of the company raised concerns. Discussions at the company did not sit comfortably with Johnston. Directors have to be bought out of the revenue-sharing agreement.

Johnston says: “Companies should work in partnership with their fund man- agers. They are the real assets of the company.”

LMI decided Johnston would be such an asset that if he wouldn&#39t go to LMI, LMI would go to Johnston, setting up a Glasgow office for him as his children are based there.

Johnston has worked at the Royal Bank of Scotland, Scottish Amicable and Ivory & Sime. It was at ScotAm where he first tried his hands at small companies funds. The life office had suffered four years of poor performance in this sector and Johnston was brought in to turn things around, which he did. “I was part of the wind of change.” But he concedes: “We did have some luck along the way.”

But Johnston is not resting on his laurels. “I am a better fund manager than I was five years ago. But you can always learn. You never know all the answers.”

He will be focusing on emerging growth and technology stocks in his new operation. “With the resources I will have behind me, I will be doing a similar job as at Murray Johnstone but on a much broader basis.”

“I am delighted to be going there. Can&#39t you hear my tail wagging? I really, really enjoy my job. I love it. Small caps isa really interesting market to bein. You get involved with some really exciting ventures. You get to meet interesting people although I must admit there is a fair share of vagabond liars.

“But generally, there are a lot of bright people in this business, people with bright ideas who want to succeed. It is a very stimulating environment.”

Is there anything Johnstone is interested in outside fund management?

“If I was more handsome, I&#39d be Mel Gibson, or maybe Jon Bon Jovi. But I don&#39t think that&#39s going to happen. I do like to ride my motorbike, which is very big and very fast.”

It seems like Johnstone is never out of the fast lane.


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