Lots of people have speculated on why you decided to leave Credit Suisse. Can you tell me your motives?
GP: It is never an easy decision to change job, particularly when you built a business from scratch to £1.2bn, so there was an emotional attachment. But we had looked at Thames River through our funds for the best part of a decade, so we have done due diligence on the funds and the people and we have finally put into practice what we have preached for a number of years, which is a strong belief that managing money is best carried out in a small environment where the investment culture is strong and we know the people well.
We had the Constellation fund at CSAM, which invested purely in boutiques, and we felt our clients would be best served by us following in our investment belief by working in a smaller house where the business chain is far smaller.
RB: We had £1.2bn in 50 investment companies and by far the biggest holding was with Thames River funds, so clearly we were big fans as investors. On a personal level, chief executive Charlie Porter was one of the first people I met in the industry during his time at Barings.
What are the key attributes of a boutique business?
RB: I guess the ratio of investment professionals to total staff is skewed in favour of the former. Then there is the ability to run money with an absolute focus. We were managing directors at Credit Suisse last year and although there are positives in that, in our hearts we wanted to stay focused on running money. Then there is the flexibility to invest anywhere, which is not necessarily the case at bigger firms. Alignments of interests are stronger at boutiques.
GP: I would point to the performance-based requirement in a sense that there is no hiding place. These places hire the people they want to hire, there is no baggage, and then it is all down to performance.
Was it always the plan for the majority of the team to come along in tow?
RB: We resigned independently of the team but wanted to ensure we had a good sized business to make sure that it started at a fast pace.
Does the fact you have equity in the business cement Thames River as your last job in fund management?
RB: We have been fortunate enough to play a part in working in two businesses that have made over £1bn in five years and we put that knowledge to work as well as possible. To do that, you have got to take some risk yourself and that is what equity is. You swap the comfort of a regular salary at a big company for the risk that sees us in the same position as our investors – that investing in stockmarket for the short term can be risky but in the long term it is always the right thing to do with your money. The longterm focus is given to us by having equity here. It is hard to see us leaving and, as Charlie says, no senior fund manager has left this firm since it was formed in 1998.
GP: We are fortunate enough to look at many business structures and management to get a unique insight. Looking at the Thames River business and individual managers here, we can see this is a long-term business proposition that we feel strongly will be a success.
What are the plans for the initial launch of five funds?
RB: It is critical to get our opening portfolios correct, hence the decision to have the ethical and offshore funds coming later as we have to speak to the salespeople overseas. We are over-weight fund managers to portfolios relative to our previous experience and that is a great way to start the business. But we have run the biggest and most varied funds of funds in the past decade, so when sales and marketing have gauged what our clients want today, there is no rush to get the right offering.
Do you see yourselves having to differentiate yourselves from other multi-managers, given the competitive market you have come back into?
GP: There are a number of ways to differentiate ourselves. First, we work at a strong performance-based asset manager, an ethos we will aspire to. We have done what we have in the past successfully and we do not see over five years why we cannot do it again and run something as big, if not bigger.
RB: We do not want any gimmicks, we just want to supply something that the market demands. We want to combine what we have with other parts of the business and that will leave us well placed in the market.
Would you expect some of your former clients at Credit Suisse to move over?
MW: If some want to move over, that is great news but we are here to build a multi-manager business for the long term and that is about persuading IFAs that our proposition is as competitive as any offering in the market and that is what our sales department will be doing.
What about a best of Thames River fund?
MW: Charlie and I have always wanted to harness the best of the best at Thames River. We now have Gary and Rob in the office and the idea of melding their long-only expertise with the hedge fund, property or fixed income expertise we have here could end up being something special. But the guys need time to bed down.
What do you make of the market, given its recent downturn?
RB: It is a fantastic luxury to come back with a fresh pair of eyes and our first day saw us meeting four managers rather than having an induction. We hope to start investing around the start of the fourth quarter so we have some time until then.
GP: The markets have had a straight run since March 2003 and there has been no setback of more than 5 per cent in that time on a global basis. I hesitate to say this is a healthy correction because markets are moving as we speak but sometimes we need to get used to the idea that market do not go in a straight line.
RB: The concerns in the markets are those that have been talked about for the past couple of years. We sometimes need a sharp frost for the new shoots to come through.
We do not know what we will raise but we can be fairly certain that regular cashflows following launch will be relatively high so that makes it easy to adapt the portfolio day by day, week by week, in the formative time of the range. We can spend all our time looking at managers without having money involved.