How’s the restructuring?

Ilike to think of fund managers as the advertising agencies of the financial services world. There may not be as many ponytails or tattoos, but the Trump-style egos are just as terrifying. Fund management is also well served by a partnership structure and limited corporate interference. It was interesting to see that Old Mutual in the UK has sold its direct asset management business, even though it was run by a star manager, Richard Buxton. It makes sense not to have an in-house fund manager if you claim to be in the business of objective advice.

Much the same thinking went into Momentum closing down its single manager business, which had a strong brand when it was called RMB Asset Management.

Old Mutual locally has gone the opposite way. It had the opportunity to seed more management buyouts of its so-called asset management “boutiques” but stopped at Electus Fund Managers, losing the only shop that actually resembled a boutique.

Now the fund managers are deep in the bowels of the huge and highly corporate Wealth & Investment cluster. Ironically,

Old Mutual aims to offer great advice, yet the only advice it can give is “buy more Old Mutual products”.

At least Old Mutual UK, soon to be renamed Quilter, has no in-house products to sell. I was always sceptical about the decision to divide Old Mutual Asset Management (OMAM) into silos.

It is true that accountability was often poor at OMAM — the so-called portfolio manager usually knew less about the shares he owned than we journalists did. But it was a case of if it ain’t broke, don’t fix it.

Silo structure

Ten or 15 years ago, OMAM was one of the top asset managers on every consultant’s buy list. Now its market share of unit trusts has plummeted. And it has gone through several restructurings — remember the unlamented Toros, a tribute to bulls?

I hardly remember it either, or the Value boutique. As a client I got some comfort that 40 investment professionals were working on my portfolio at OMAM. Now we are lucky if four or five are. Stanlib built a similar silo structure. Like Old Mutual, it has decided there is room for only one equities silo (after toying with separate value and growth teams).

The structure seems to be under review once again. That’s the danger of restructuring.

To repeat an old joke, if you meet someone from the World Bank’s International Finance Corp at the airport, it’s always safe to start a conversation with “How’s the restructuring going?”

Investec is the only shop that has made a multistyle, siloed approach work. It is complicated for clients, who find Coronation and Allan Gray’s single strategy much easier to understand.

But it means John Biccard operates his Value Fund in a way that is entirely different from the more mainstream Investec Equity Fund run by Chris Freund. There is a further choice in the somewhat grandiosely named “Quality” team, which runs the Opportunity and Managed Cautious funds.

Sanlam has allowed management to buy control of what should have been its aggressive equity silo, now called Denker Capital. It has also split its investment team between third-party and Sanlam’s own funds. This is quite old-fashioned. Old Mutual used to have a separate life team.

There was a bit of a soap opera when Liberty split the business between Sidney Place and Dave Golembo, who did not have a very supportive relationship.

It makes sense not to have an in-house fund manager if you claim to be in the business of objective advice