Creative switch to private portfolios

Best performing institutional managers are heading for the more imaginative world of the wealth market, reports Yuri Bender.

Institutional fund managers, disillusioned by curbs on their creativity, are increasingly moving to the high net worth end of the retail market. Distributors will play a key role in their success. One of the most high-profile recent switches was Robin Geffen, ex chief investment officer for Orbitex and the man who restructured pension funds business at Scottish Equitable. Mr Geffen, the best performing institutional manager with Orbitex for five consecutive quarters, has started off with nearly E50m in his new venture, Neptune Investment Management, a huge leap from the E11m overseen at Orbitex. “There is a major trend of institutional managers going retail,” confirmed Mr Geffen. “Retail managers are given a much wider remit. Institutional managers are now restricted to an approved list of stocks, which is part of a misplaced reaction to long-term underperformance.” The problem for Mr Geffen at Orbitex was that the name was unknown, and considered as a boutique by the consultants who dominated the industry. They demanded a five year track record. “Five years down the line, there will be somebody else managing the money,” said Mr Geffen. If you fail to impress the likes of Watson Wyatt and William M Mercer with your alphas and risk control, then you might as well forget it. On the retail side, however, current performance is everything and there is a renewed focus on the individual manager. Mr Geffen hopes to attract high net worth clients through intermediaries on the back of his numbers and reputation. Consuelo Brooke, a legendary asset management figure, made a similar decision when she “retired” from Merrill Lynch Asset Managers after 32 years. Instead of putting her feet up, Ms Brooke has joined a contemporary of hers, Béatrice Philipe, who runs over E300m for large clients including the giant California Public Employees Retirement System (Calpers). Ms Brooke will be running a Dublin-based fund with a pan-European remit, hoping to raise E50m in the first year from high net worth individuals. The fund will employ a bottom-up, stockpicking, research-based strategy to exploit inefficiencies. Concentrating on small and mid-cap investments, typical stocks in Ms Brooke’s portfolio will be Spanish IT provider Indra Sistemas and UK semiconductor manufacturer Arm Holdings. Marketing in Switzerland, a key market for Philipe Investment Management, will be carried out by Altius Partners, a subsidiary of Swiss private bank Mirabaud. “We will not use hired shoe-brush salesmen to market our funds,” said Ms Brooke, who believes high net worth families are increasingly behaving like institutions. “Presentations are now the same for private clients as for institutions,” said Andrew Hall, vice chairman of Swiss group Sarasin Investment Management.