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Marc gordon

The Co-founder and managing director of Close Fund Manage-ment says he has been accused of being too evangelical in his concerns about aspects of the industry but there is no doubting his feeling concerning the ‘huge savings dilemma’ and the general failure of with-profits funds. Interview by Matt Goodburn

Over the past 12 months Close Fund Management managing director Marc Gordon has started to learn guitar and taken up kite surfing – and admits both hobbies are, of course, symptomatic of a mid-life crisis. But when he’s not fingering new chords or flying over beaches, the co-founder of Close Fund Management spends a fair amount of his time waxing lyrical about defined risk, return investment and opportunities for innovation.

After a spell at NM Rothschild as a retail analyst, the seeds of Gordon’s future interests were sewn as a UK equity manager at John Govett in the early Nineties when he took over the Govett strategic investment trust.

“I got interested in space that was not FTSE 100 or the Hoare Govett smaller companies index and I think we were instrumental in getting the FTSE mid-250 benchmark recognised,” he says.

Gordon’s incentive to found Close was driven by his experiences of working with mid-cap executives.

“Lots of mid caps are started by people from large organisations who see gaps in the market that a larger company cannot exploit,” he says.

A frustration with the focus in the mid-Nineties on long-only equity funds coupled with a the Government’s growing belief that people needed to be more responsible when it comes to saving also spurred him on.

He combined his expertise with the group’s co-founder Richard Bolchover and his derivatives skills to launch Close Fund Management in 1995, which he regards as the first defined risk and return investment solutions company.

You could be forgiven for thinking Gordon’s investment concerns keep him awake at night as his conversation is littered with them.

The pensions black hole and the general failure of with-profits funds are causes of concern for Gordon and he believes most investors, and even the IMA, do not fully understand or appreciate the defined risk and return vehicles his firm has introduced.

Gordon has been lobbying the IMA to create a new targeted return sector for some time – many of Close’s funds currently sit in the IMA’s guaranteed/protected sector which he feels can confuse investors.

According to Gordon the IMA is sympathetic to the need for change and is optimistic it might create a new absolute return style category within the next two years.

“I am a great believer in long equity funds but they need to be a part of a wider investment process. People were persuaded 30 years ago to go into them and it worked well for a long time. Now, liabilities are much more onerous and we are aware of the problems associated with return shortfalls.”

Gordon says he has been accused of being too evangelical about his concerns but you are left in no doubt that they are deeply felt.

“We have a huge savings dilemma and there is no other way of solving the problems than by increasing the predictability of individual parts of your portfolio.

“You cannot put all your savings on the roulette table, nor get by just sticking it all under the bed.”

He is adamant that nearly all the group’s products are pioneering and is flattered that they have brought many imitators to the market – particularly, he feels, from the investment banks.

He proudly reels off a long list of more firsts, including the escalator funds, the first listed guaranteed hedge fund in partnership with Man group and the first single manager multi-strategy listed hedge fund. Gordon also believes Close’s Escalator funds are still the most viable alternative to with-profits funds. “It was a paltry 0.02 per cent for 2005 from my endowment returns. The equity markets went up 19 per cent and our Escalator 95 went up 18 per cent at the same time. If you look at our offerings we are still the only organisation running 100 per cent protected unit trusts with the Close Escalator 100 funds.”

He is underwhelmed by the recent spate of balanced and distribution fund launches.

“You need more daily priced vehicles. Most balanced and distribution funds do not give the investor certainty and they certainly do not help them in times of trouble.”

While proud of Close’s investment creations it would be easy to imagine Gordon as pessimistic, but that would be misleading.

He says there is now a greater acceptance of managing money for positive total returns rather than against a benchmark and says Close is looking to do more with hedge fund groups Man and Blue Crest.

More closed-ended products and further alternatives to with-profits funds are also in the pipeline.

Gordon is an admirer of News Star’s John Duffield and Man Group’s Stanley Fink, which indicates an admiration for highly driven investment specialists, but it would be wrong to assume he never switches off.

When not spending time with the family, he plays squash and tennis and admits that mastering the F-chord on his new guitar causes consternation.

He also professes a love for vinyl, and says playing LPs on his coveted Lynn turntable is a great relaxant.

“Being good or successful at what you do does not necessarily mean working 24 hours a day. Some firms create this culture for show and others have to do it but I believe you will be much more productive if you are happy.”

Born: London

Lives: North London

Education: Law degree from Cambridge University

Career: Director and Head of UK Equity Department at John Govett & Co Ltd. Govett Strategic Investment Trust Manager. Prior to this, six years at NM Rothschild & Sons Ltd

Likes: Spending time with my family, squash, playing the guitar, ballet

Dislikes: The tube

Drives: Subaru

Favourite book: The Asterix

Favourite film: Sleeper

Favourite album: Supertramp (Their eponymous debut album)

Life ambition: To have a happy and healthy family

Career ambition: To continue to be pioneering and innovative in the investment industry

If I wasn’t doing my current job I would be… An architect

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