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Profile: OMGI’s Stephen Message on running £1bn at age of 25

Most people at the age of 25 have their worries in life but none of those usually concerns running a £1bn fund. Old Mutual Global Investors’ Stephen Message’s experience is different.

Now in charge of the £140m Old Mutual UK Equity Income fund, Message says he has been fortunate on the path to his current role.

“I started a with a US-based investment firm called Bessemer Trust – a private wealth manager headquartered in New York with an office in London,” he says. “The UK office was responsible for developed markets outside the US. It was a small office with four investment professionals who wanted a junior analyst.”

The opportunity was one Message says he was lucky to receive because it meant he did not need to go through any form of analyst graduate scheme, having left university 12 months previously.

The experience as an analyst at Bessemer was a good one for Message. Within 18 months of joining he was running a £1bn UK mandate.

”It was quite nice at first as I spent the first year looking at Asian companies, which was quite useful. 

“Then I was appointed to run the UK portion of the office. I was 25, which was far too young but you are not going to say no.”

When Message had been with the firm for two years, Bessemer presented him with his next opportunity as the firm changed its direction and moved away from a retail focus towards a geographic perspective.

Message says: “I was fortunate because I would probably not have left unless that had happened. I moved across to OMGI, which had an analyst job available.”

Within 12 months of joining Old Mutual, Message was given the job of managing the UK Equity Income fund. The opportunity meant he could move back towards a generalist perspective, in contrast with the sector focus that had been thrust upon him at Bessemer.

Message was also able to draw on the experience of top fund managers such as Dan Nickols and Simon Murphy.

He says: “The timing was so good because the business had a very good small and mid cap under Simon and where they lacked scale was on a large, good M&G track record to emulate.

“It was a very interesting role as I got to be a generalist again, working for Simon as senior analyst on the investment desk.”

Message says he can appreciate the difficulties of fund management.Perhaps in contrast with other managers, he endorses the prospect for growth within financials and believes the potential for growth in the sector presents fantastic opportunities.

He says: “Our fund been growing nicely this year. Over that time we have been increasing financial companies – 38 per cent – as we have got meaningful holdings in HSBC, Lloyds and Barclays.”

“I want Lloyds to become a boring high-street mortgage lender – and that will happen. There is a gradual process of rehabilitation, probably through regulatory curve-balls.

“There are other managers that are still in the uninvestible camp for a lot of people. Banks are quite interesting. As dividends grow at Lloyds, it will become quite meaningful and it could pay a dividend of more than £1bn in the future.”

Message is supportive of the potential for growing dividends in the banking sector.

He says: “Barclays has been in between, paying quite a low dividend, and we think it is starting to improve for equity income. We are now five to six years out of the bottom of the stockmarket. Many companies are paying rising dividends.

“Financial is still a tough area and that’s why there is opportunity for growth – I’m pretty sure this time next year we’ll see a gradual improvement.

“The other area in which we have been doing significant work is to the number of medium-sized companies – valuations are looking a bit lighter. We have taken a bit towards large cap.”

As well as his passion for fund management, Message also confesses his love for West Ham, drawing parity between investing in UK stocks and blowing bubbles at Upton Park. He maintains his optimism for the team in spite of having to put up with plenty of mockery from his colleagues.

He says: “I like following football. You have got to be an optimist to be in equities and to support West Ham. One of my colleagues who takes the mickey is a Leeds fan, so he’s got his own troubles.”

Message also professes his love for music and reveals he has a talent for playing the piano.

“When I left college, I thought I could either go down the science route or go into music. I chose science but music is really important to me. I used to perform in a lot of bands and I play the piano at home. Quite a few friends let me do that – I’ll do weddings for work friends because I’m free and cheap,” he quips.

Message is still only 32, so he rebuffs comments made recently by OMGI’s head of UK equities, Richard Buxton, who said: “Stephen is a young man – and he also looks very young.”

Message says: “I’ve got a few grey hairs but everything is still going well.”

QUESTIONS

What is the best bit of advice you have received in your career?

Read as much as possible, especially books from other investors on their success/mistakes.

What keeps you awake at night?

Not a lot keeps me awake at night really, apart from the Circle line tube outside my flat.

CV

2009-present: Fund manager, Old Mutual UK Equity Income Fund

2008-2009: Analyst, UK Equity team, Old Mutual Global investors

2007-2008: Fund manager, UK component of Bessemer’s International Equity Fund

2006-2007: Analyst covering Asian and UK equities, Bessemer Trust

2005- 2006: IT business analyst, Detica

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