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Swip strategy

As Scotland’s secondbiggest investment company, Scottish Widows Investment Partnership has been one of the busier asset management firms in recent months.

The company, which was formed in 2000, has £97.8bn of assets under management and is looking to build on its market share of 3.5 per cent.

Swip has recently joined the multi-manager fray with the appointment of Mark Harries and team of four from Cazenove, with the firm looking to launch global and multi-asset products. It also has an outsourced manager of managers product through Russell Investments and is among only a handful to have both offerings.

The firm last week recruited former Winterthur head of distribution Bernard Henshall to help push the move into the Fof market, with the company keen to market the vehicles independently from its parent Lloyds TSB. Fifty-five per cent of its sales come through non-bank channels.

The move into Fof signals a new push for a firm that has had ups and downs in its seven years. Its first chief executive Orie Dudley quit the firm just two months after it was set up after he publicly questioned then Scottish Widows chief executive Mike Ross on whether parent Lloyds TSB was fully committed to the fund management arm of its business.

It was the late Chris Phillips who oversaw the big boom at Swip, taking on the chief executive role in 2003 and overseeing a £25bn growth in funds under management in the next three years. Phillips left in the early part of this year to join Morley Fund Management but died from hypothermia while walking in the Pyrenees before taking up the post.

Swip announced a replacement for Phillips last week with the appointment of Dean Buckley, the man who was primarily responsible for building the HSBC asset management business in the UK and the Middle East.

Swip head of UK distribution Simon Wombwell wants to continue to build its market share without focusing on any one area.

He says: “The strategic view has always been to make sure we boost our exposure to all global markets. We now have a strong UK, European and US offering as well as a joint venture in Asia.”

Wombwell had a number of challenges to tackle when he arrived at the firm in early 2005, including redesigning the product range, lowering minimum investment levels on funds and reclassifying some funds to ensure that advisers saw these for what they were when they carried out their sector screen picks. He also introduced trail commission across the fund range.

He says: “We have always wanted a strong proposition across the board and Fof is an integral part of that. We are happy with what we have done and we hope to keep adding with further Fofs and a European income launch. We have seen great promise from our absolute return vehicles while money continues to flow into our property trust.”

Investment Management Association figures place Swip fifth for UK retail funds under management, confirming the success of recent times.

However, Hargreaves Lansdown head of research Mark Dampier says he is still not sure of the Swip proposition despite the new additions in recent weeks.

He says: “The group suffered badly when ex-Widows chief Bill Main decided to retire, a decision which came not so long after 11 senior members of staff left the firm, including Sandy Nairn and head of retail fund management Graham Campbell.”

The 11 went on to set up boutique fund firm Edinburgh Partners in 2003.

Dampier adds: “Too much turnover is still happening for me. The group recently lost its European team to BlackRock just when it was starting to perform while David Urch quit his role as head of the UK opportunities fund to join Fidelity’s new Edinburgh office.

“Then there is Richard Dunbar who manages the £131m UK income fund, who was on the verge of joining our Wealth 150, only to see performance pegged back in the past 12 months.”

Informed Choice director Martin Bamford says much of Swip’s offerings have been overshadowed by the life and pension side of Scottish Widows’ business.

He says: “We do not recommend many of their Oeics, which is usually due to communication issues. There has been little or no contact from them, whereas we have had lots of contact from their life and pension team.”

BestInvest investment manager Hugo Shaw believes the growth of fund firms and the increased importance of wrap platforms has made fund selection more ruthless, something which has hit firms such as Swip hard.

He says: “We like the Swip property trust simply because life companies have been running them for years and have experience of handling the ups and downs but on the equity side we have not really been big fans as a number of those funds are unrated. But that may have as much to do with the turnover than performance issues in some cases.

“They do have some attractive options such as the pan-European smaller companies fund managed by Kathleen Dewandeleer but, across the board, I would say it fits into the average bracket.”

Chelsea Financial Services managing director Darius McDermott says: “There are positives at the firm. Swip has a good UK offering and had a strong European team. The firm has also performed reasonably well in the emerging markets and bond arenas. The issue for Swip, as with most fund management arms of life companies is retention. That problem has to be solved, especially at the top.”

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