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Swip lash

After making great strides into the IFA market after a sustained period of turmoil, Scottish Widows Investment Partnership has been hit by upheaval.

The resignations of chief investment officer Sandy Nairn and head of retail fund management Graham Campbell are a huge blow to a company, which has widely been seen as a sleeping giant.

The company – which was formed in early 2000 following the merger of Hill Samuel and Scottish Widows Investment Management – had been battling to improve less than impressive fund performance figures.

But the arrival of Nairn in late 2000 and Campbell several months later changed all that. By the start of this year, IFAs were beginning to view the company as a viable option.

Chelsea Financial Services managing director Darius McDermott says: “Swip was a very big fund management company going nowhere. Campbell turned around the performance of the UK funds to the point where it was beginning to come back on IFAs&#39 radar screens. We were seriously looking at putting them on our recommended list. We are not any more. Campbell and Nairn&#39s departure is a huge blow.”

Swip was formed after Scottish Widows was absorbed into LloydsTSB Group in March 2000. The fund company, under the Swim brand, had been struggling. In 1998, it appointed a new chief executive, Orie Dudley, who later res-igned, citing Lloyds&#39 lack of commitment to fund management and Nairn was then recruited as CIO.

It was this move, combined with the arrival of Campbell and the merger, which boosted Swip&#39s funds under management to £70bn and helped spark a revival in the fund firm&#39s fortunes.

The expectation now is that the resignations will cause Swip to lose the ground it has gained over the past three years. Bates Investment Services senior investment adviser Kerry Nelson says: “Nairn has long been very highly regarded across the industry. His loss, in particular, could be very serious. Swip always needed strong characters with high profiles and good reputations and these two fitted the bill.”

What Nairn has received the most credit for is the implementation of a research platform which transformed the fund company&#39s previously shambolic investment process in the UK.

This new system, twinned with Campbell&#39s ability to boost Swip&#39s investment performance, made the company more marketable to IFAs.

Campbell may have been head of retail but he also managed money, responsible at various times for the giant £1.7bn UK growth fund, £360m UK select growth and £27m UK equity fund. He was still managing the latter fund when he resigned.

Nairn and Campbell are expected to set up their own investment boutique in the coming months but there is also speculation that this could lead to the departure of a further five or six employees.

Nevertheless, Swip says the departures will have only limited impact.

Sales & marketing director Andy Frith says: “Sandy brought in a new research platform but he has not had any influence on bonds or property. In many senses, it is a natural break for them both – the equity platform has taken two years to complete, which is a long time. The guys taking over have been intimately involved with this process so there will be continuity there.”

The replacements are And-rew November, currently head of institutional funds and global strategy, who will take over as CIO for institutional business, and Graham Wood, head of global sectors and international research, who will become CIO for equities.

The reaction to their app-ointment has been muted. To a large degree, their previous positions pre-empted them from becoming known to IFAs. The two men may yet be able to limit the damage done by the resignations but their efforts could be hamstrung by internal disarray.

One Scottish fund manager says: “It is clearly not a happy ship. People have left because of marketing disagreements, a lot of life company people have been drafted in and others have been earmarked for the chop or have been sidelined. The whole operation is also still very much under the domination of Widows, which means it is highly bureaucratic and slow moving. The loss of Campbell and Nairn will be horribly destabilising and I can see the entire thing imploding.”

The manager says there is a strong possibility that Swip will become just an investment department of its parent again rather than a stand-alone business. This would certainly dent its credibility with IFAs, with whom Swip was once a dominant player in the European funds market with managers of the calibre of Albert Morillo. If this were to happen, however, Swip would survive in one form or other.

For one thing, it will always sell products. LloydsTSB, its ultimate parent, has a vast network of branches through which it sells big quantities of Swip and Widows products. It also still has £70bn under management, making it one of the UK&#39s bigger asset managers. Widows, in addition, remains supportive of its subsidiary although life company parentage is often seen more as a burden than a boon.

But, despite these factors, the last thing that Swip wanted was to lose its two highest profile employees. It has spent much time and effort supporting the drive into the IFA market but, almost overnight, it has been left with little to show for it. Gone are the days when Swip funds made regular appearances on “dog of the year” lists but, as IFAs point out, the men responsible for implementing the new process which transformed the business are gone.

Swip may claim that their loss can be absorbed without disruption but after being on the cusp of cracking the IFA market, they are now facing the long climb back to credibility.


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