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Lost in transition

If Morley is to bounce back it must improve performance and fast, says Chris Salih

The UK’s fourth-biggest asset manager Morley has had its fair share of upheaval recently with appointing a new chief executive, the departure of its chief investment officer and launching a couple of funds.

Hargreaves Lansdown head of research Mark Dampier says: “When it comes to recommending funds, Morley has never really got on the radar, with the sole exception being the special situations fund it outsourced to the Schroders’ pair, Andy Brough and Richard Buxton.”

The 247 Norwich Union special situations fund was set up last year and is 93rd out of 309 funds in the UK All Companies sector over the last three months.

Dampier adds: “The simple fact is that Morley seldom got on to my buy list. Add to that all the staff turnover and the group looks very much like it is in the deep throes of transition.”

Retention is definitely an issue for the company, with staff departing from the top down. The exodus began last September, with the surprise resignation of chief executive Keith Jones, who was replaced last month by Chris Phillips, who is a former chief executive at Scottish Widows Investment Partnership.

Tim Thomas then decided to leave as head of equities after only 11 months. He was replaced by head of emerging markets Niall Paul and there was a managerial reshuffle that resulted in five equity managers leaving.

BestInvest head of communications Justin Modray says the only area of the business that continues to perform is the property offering. He says: “It has not performed that badly, with its corporate bond and ethical teams both producing solid returns. But those returns have been fairly dull in the cold light of day and, with all this restructuring, it has been the performance of Geraldine Davis and the property team that has kept the wolves from the door.”

Perhaps the biggest impact has yet to be felt, with the recent announce-ment of the departure of chief investment officer Katherine Garrett-Cox who is set to leave at the end of March.

Garrett-Cox, dubbed Katherine the Great, has been credited with many of the good things that have come out of the firm, with the general consensus being that her decision to move to Alliance Trust could leave a difficult gap to fill.

Dampier says: “She has gone from fund manager to chief executive, a transition that is difficult and not always successful. She may have done a great job on the institutional side but, from my perspective, the retail offering is not that great and has shown little improvement during her tenure.”

Origen deputy head of research and investment Richard Wallis says: “Her departure may have been a case of toys being thrown out of the pram as she did not get the top job and went to get it somewhere else. Her success was getting all the processes in place, which, for a time, meant that Morley had a good set of funds but turnover has put pay to that.”

Morley has replaced Garrett-Cox with head of strategy Adrian Jarvis in the role of interim CIO.

Modray says: “Garrett-Cox has been a big name as she helped restructure the Morley process. The question is where it goes from here.”

Wallis says: “The firm has seen a lot of departures from fund managers to chief executives, all of which indicates there is dissension in the ranks. It has a good property offering and a solid ethical and fixed-income capacity but what the group really yearns is stability.

“What does not help is lots of talk of it getting rid of the Morley name in favour of Norwich Union, with almost all its funds now under the NU banner. Morley has a slightly better reputation in the City but it is hard to see where Norwich Union stops and Morley begins.”

Wallis believes that if the situation is well handled, the deep pockets of Aviva could help resurrect Morley. He says: “The key for the firm may be just to start with a clean state and build the business once again. Its property offering is definitely a sound enough base to begin along that road.”


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