Those who know M&G UK retail managing director Phil Wagstaff are never surprised by his straight-shooting way of looking at the industry. He is never one to jump on industry bandwagons, preferring to use his own gut instinct.
So while there is presently a lot of talk about a “bond bubble” about to burst, Wagstaff sees no credence in this opinion. But he thinks it is time to move from investment-grade bonds to high-yield and he seems to have the figures to back it up.
For the past year, Wagstaff has been busy re-engineering the company's equity offerings after poor performance that revealed structural problems within the firm's fund management. He now feels he has an organisation that can compete in the marketplace and the present key for M&G seems to be tracking demand in bonds.
Wagstaff says investment bonds have had a good run but have come off the boil in the past couple of weeks. He says that, unlike a lot of other firms, M&G believes there is still no growth to come on the FTSE and that interest rates are still in a downward trend rather than upward. He believes the real issue is that there will still be a considerable demand for bonds. “In the last couple of years, high-yield bonds have not been wanted but at the moment they are much better than investment bonds.
In response to the critics, Wagstaff points out that 80 per cent of the company's funds are now performing above average. “We got a thrashing in the press a couple of months ago and in one respect it was deserved but we are now set to take on the market again. For instance, our recovery fund has been in the top quartile every period for the past five years.”
Wagstaff concedes that M&G had been punching below its weight. “It's true. We haven't delivered in the past. If we made a mistake, it was that in 1997 we had a dogmatic approach to growth. When value came back into style we were severely caught out. People think of us as a value-style house but we are not. We were criticised because all our funds were performing the same way. The reason for this was that they all had a series of common holdings. That is not the case now. The holdings in each find are very different and each fund has its own objectives. We want to be seen now as a company with the individual flair of a fund manager but with a firm structure behind it.”
He says the firm is now more in control of its products for the IFA market. There is a lot more emphasis on analysis and M&G has a large and growing team of analysts who generate ideas for the fund managers. “This is a great help to our fund managers because if we deliver performance, we know exactly how it happened.”
Wagstaff believes M&G's edge over its competitors is simply that it is the biggest investor in the UK. “We have more access to UK companies than anyone else in the industry because of our scale but until now we have not made enough use of this advantage.”
To promote its strength and the new changes M&G has embarked on a rebranding campaign which Wagstaff believes shows the company's progressive nature. The ads raised eyebrows at the time, when the firm put up posters of several hundred words explaining at length some of the basics of investing.
“Our campaigns are about excellence in the performance of our equities and bonds and how we adamantly believe in the nature of advice. Around 80 per cent of our business comes from IFAs so it is important that they understand the nature of what we do. If you run a fund to be in the top decile it can easily fall into the bottom decile.” The campaign has won several international awards.
Wagstaff is confident that M&G is equipped to handle most of the main issues that the industry is facing. He believes the company is well placed to make the most of depolarisation.He thinks it is more that intermediaries will tie with certain life companies that will control the distribution landscape.
“We have made a big play with a number of providers and believe that our size, strength and brand will be attractive in the new marketplace.”
It is hard to separate Wagstaff's personal life from his professional one. A self-confessed workaholic, he lives in London and spends most weekends with his two young daughters. “A lot of my friends are in the industry. In my social life, I spend a lot of time with the competition but we do not talk business, we are mates with the same interests.”
Wagstaff is a keen skier but says these days if he is not in the office he is generally operating as a taxi service for his daughters. On holiday, he is happy to sit back, relax and read a couple of novels to escape from the world.
“I'm not going to say I'm reading anything intellectual or management-oriented because the fact is that if you want to sit back and relax, there is nothing like a good trashy novel to let you unwind.”
Born: Yorkshire, 1963
Education: BA (Hons) Accountancy
Career: 1988-1994, regional sales manager NM Schroder; 1994-1997, London regional sales director Henderson Investors; 1997 – Present, M&G Investments sales director, deputy managing director, then since 2001 managing director of UK Retail and director of M&G Limited
Career ambition: “To be acknowledged internally and externally as a success at whatever level I manage to reach.”
Life ambition: “To enjoy the journey.”
Likes: Skiing, golf, dinner with friends, spending time with my two 2 daughters, Katie and Anna.
Dislikes: Bureaucracy and red tape, can't-do attitudes.
Drives: BMW 330
Peers say: “I have enormous respect for the man. He is a true professional and I enjoy listening to what he has to say about the marketplace. A visionary who does not follow the market norms.”