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This week in Investment

David Kiddie’s departure from Barings last Friday was a surprise to some in the investment community.

Swiftly placed on the time-honoured gardening leave, Kiddie will soon take over the role of chief investment officer equities at ABN Amro, replacing Kevin Smith who leaves for personal reasons.

While Kiddie’s departure might seem sudden, the elevation of his successor at Barings Tim Scholefield, looks a good deal swifter.

Scholefield was only recruited by the group six weeks ago to head up global equities, a similar role he held in his previous job at SWIP.

Whether he knew he would be taking Kiddie’s job when he joined is a moot point, but unlike Kiddie, he will continue to run money at Barings, managing the global growth fund.

Scholefield seems relatively unknown to IFAs, and many appear to be rather non plussed by his recruitment to put it kindly. Kiddie on the other hand is better known, and since he joined in 2003 has been credited with recruiting some decent fund managers after a period where a whole raft of managers departed, including Richard Buxton to Schroders.

Kiddie’s tenure coincided with the hiring of European fund manager James Buckley, and head of UK retail equities Charlie Deptford. Recent performance has been decent but Barings may be worried that after a period of relative stability, despite the defection of the European team to Resolution in April, Kiddie’s departure may precipitate further losses.

Boutique multi-manager T Bailey’s decision to increase trail commission to IFAs to 75 bps from the more standard 0.5 per cent, has raised a few investment eyebrows this week.

Cofund manager Jason Britton believes most IFAs are under severe cost pressures and have had to deal with a host of new compliance issues, rendering the 0.5 per cent trail commission insufficient to finance their role in educating clients.

He is also bullish on the fact that the boutique is not using the charge rise to take a bigger chunk for themselves. He believes if T Bailey can run their business on the same cost base while raising extra commission for the intermediary, other groups should be able to do the same.

If they can’t, he says, they should review their cost base urgently.

It remains to be seen whether rivals move to a similar charging structure and whether the move leads to more IFAs casting an eye over the group’s three multi manager fund offerings. Opinion appears polarised.

Some rivals and intermediaries see the move as little more than a bribe from a firm desperate to increase business.

Others say T Bailey should be applauded for recognising and recompensing the intermediary in the crucial advisory role they play. After all, if it means intermediaries who have cosied up to other, often larger multi-manager groups cast a cursory eye over the group’s offering, where is the harm?

As with the Norwich Union move to 20 per cent indemnity commission in August, if it proves to be working, expect others to take a very close look.


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