Life for active fund management firms might seem at a crossroads, with their role harder to justify thanks to the rise of passive investing, but Columbia Threadneedle Investments’ new regional chief executive Michelle Scrimgeour is confident.
“Active management is far from dead,” says Scrimgeour, who is five months into her role as head of its Europe, Middle East and Africa business.
With the performance of actively managed funds beginning to pick up, she suggests we might see a turning point for passive investing.
“Things go in cycles. We’ve been in a bull market for a very long time but things do change. The most important thing for anyone taking investment advice is to understand what their portfolio will do when markets go down as well as up.”
On things changing, Scrimgeour has seen a lot in her close to 30 years in the industry.
Before taking over at Columbia Threadneedle from Campbell Fleming, who left to head up Aberdeen Asset Management’s global distribution, she was chief risk officer at M&G for almost five years.
But her career spans back to Mercury Asset Management, which would later become Merrill Lynch Investment Managers and then part of BlackRock.
At BlackRock, she was a member of the European executive committee, which ran the firm’s $1trn EMEA business and oversaw the integration of BlackRock and Barclays Global Investors in London.
Scrimgeour says further consolidation in the asset management industry is inevitable.
“My career tells me companies grow and change all the time. I’ve had insights at firms that were going to be acquired and those that have done the acquiring, and that has given me a really good understanding of the challenges involved in bringing an organisation together.
“What’s great about Columbia Threadneedle today is that we are a global firm and we’ve done the hard work to bring that together.”
Columbia Threadneedle is the result of a merger and rebrand of the UK’s Threadneedle Investments and US’ Columbia Management in 2015.
Minneapolis-based parent company Ameriprise bought the two companies in 2003 and 2010 respectively, for a total of £1.2bn.
April 2017-present: Chief executive officer EMEA, Columbia Threadneedle Investments
2012-March 2017: Chief risk officer, M&G
2010-2011: Co-head of fixed income business management, BlackRock
2006-2009: Chief operating officer, international fixed income, BlackRock
1997-2006: Various roles, Merrill Lynch
1989-1997: Various roles, Mercury Asset Management
It currently ranks 35th-largest asset manager in the world and has more than £400bn in assets under management.
The next step is to promote the brand where it is less known, particularly boosting its offering in Europe ahead of Brexit.
Scrimgeour says: “We already have people on the ground [in Europe] so this is more about looking at what we can do other than extending the Sicav range. For sure, with the people we already have and the products we already have we can be bigger than what we are today.
“We have a good current range and, looking at the European Sicav range, we are particularly strong in multi-asset. We have a great track record in the UK in managed funds so the whole solution is very interesting for Europe.”
But just as important a message to get across as the breadth of what is on offer is the approach Columbia Threadneedle has to fund management. According to Scrimgeour, the firm achieves the best results by putting itself in its clients’ shoes.
“It is not just what we do but how we do it. I am very impressed by the approach we have and it always comes back to culture. It is a very collaborative organisation and I see that collaboration working not just internally but with our clients, wherever they are, as well.
“Our proposition has a lot to do with performance, but then the other piece is the product and how you deliver that, and ensure it does what it says it should. Then there is the relationship with the client and the whole client experience.
“We should not forget that the reason we exist is to manage other people’s money. That is why we have jobs. Asset management has a role to play in society by doing that job very well, and we recognise that.”
Disruption to the active fund management world is coming from more than just the rise in passive investing. Indeed, regulation has a big part to play too.
Columbia Threadneedle is one of very few asset managers yet to announce its position on how to
pay for investment research once Mifid II comes into force at the start of next year.
Mifid II asks fund managers to decide whether to pay for research themselves, through their own balance sheet, or to charge investors through a research payment account.
Scrimgeour says: “We’ve had a programme in place for a very long time working towards the date [of Mifid II implementation]. We are doing everything we can to be ready. With regards to research commission, we’ve been going through a process and we are going to be talking to clients shortly.”
When it comes to responding to what the UK regulator wants, in particular on what is included in the FCA asset management market study final report, Scrimgeour says the company is “in a reasonable position”.
She also says it is “appropriate” that the regulator is looking at platforms and other parts of the value chain, not just fund managers.
“We are supportive of many initiatives the FCA has suggested. We had non-executive directors at the board for a number of years, and we also have a non-executive director who is very focused on the customers to make sure we are held to account on our responsibilities.
“It is also good to see the FCA is looking at the whole value chain, not just asset managers. I do not know how it will all end up but, when we come out of this, it is good to have considered all aspects and how they impact consumers.”
What’s the best bit of advice you’ve received in your career?
To be open to change and see it as an opportunity. Being flexible and responsive to change led me to take on challenges outside of my comfort zone which have been some of the most important steps in my career.
What keeps you awake at night?
What has had the most significant impact on financial advice in the last year?
The increase in asset management consolidation is reducing the choice for advisers, leading to an increase in use of discretionary fund management, multi-asset, model portfolios and central investment propositions in the search for solutions based on outcomes over benchmark.
If I was in charge of the FCA for a day I would…?
Encourage the recruitment of industry veterans as senior advisers to supplement FCA knowledge and enhance trust between the regulator and firms.
Any advice for new advisers?
Be passionate about what you do and use specialists where appropriate.