Old Mutual Fund Managers is gearing up to make a major move into the retail investment market. After recruiting a team of high-profile fund managers from Hill Samuel Asset Management this summer, it is slashing its charges across the board in the new year in a bid for the IFA market.
The new-look operation is headed by former Hill Samuel chief investment officer John Ainsworth who has taken the pick of the HillSam fund management team with him, including his UK smaller companies co-manager Ashton Bradbury. Bradbury's reputation is such that HSBC launched a fund for him when he was in its asset management division in 1996. Now Old Mutual is set to do the same, with a UK small-cap fund in January.
Hargreaves Lansdown head of research Mark Dampier says: “New small-cap funds and high-profile managers are a fairly potent mix so I would expect that to do fairly well.”
The others from HillSam are former head of global strategy Peter Baxter, former head of Far East and emerging markets Fiona Hathorn and former head of European equities Adrian Farthing.
Although Farthing lived slightly in the shadow of head of pan-European equities David Kiddie at HillSam, many IFAs recognise him as a manager to watch. For the European fund, which HillSam managed for Trade Union Fund Managers, few people know that Farthing made the stock selection rather than Kiddie.
Dampier has has already effectively put Farthing's fund on Hargreaves Lansdown's buy list. He says: “It is like a third division football team buying Beckham and then Giggs. Suddenly you are saying to yourself, hang on, this is a team to watch.”
The next few months are likely to see OMFM changed beyond recognition. First, there is to be a significant change in fund management style. Previously, all the firm's developed market equity funds were managed under a quantitative system. Many funds have already changed to an actively managed structure, with the entire range to become active in the long run.
OMFM is looking to transform its brand. Old Mutual has not been a particularly strong brand in the IFA community. Most of its business has been institutional and its retail performance has generally been too poor to turn heads.
Dampier says that even under its previous Providence Capital brand, the firm was never very popular with the IFA market. He says: “In the past, it did not quite find a niche and the fund performance was less than exciting.”
Turning the performance around is going to be a challenge. Of the company's 24 unit trusts that are over a year old, 15 are still in the third or fourth quartile for their sector over the past 12 months. Farthing, in particular, has a big task on his hands, with OMFM's three European funds ranked 78th, 96th and 98th out of 99 in their sector.
Head of marketing Ian Pascal, who also joined with Ainsworth from Hill Samuel, says the firm is not looking to become the UK's biggest fund manager but one of the best. He says: “We are more interested in being regarded as one of the best firms around. Best in terms of performance and best in terms of how we look after our clients.
“We have already been spending a lot of time talking to our main IFA clients about what we are doing in Europe and you will see a steady increase in that activity. Our primary focus will be on intermediary business.”