True grit pays dividends for Veritas

Veritas adheres to the principle that anything it did would produce a real return for its clients - surging growth has proved the reward of holding firm through the crisis. By Tomas Hirst.

“The firm gives its people the freedom to manage money in any way they see fit without imposing a house view on them,” says Carne. “Ezra Sun has always been an unconstrained manager.”

Last month the F&C team bought into the Veritas Asian fund in their Lifestyle funds as part of a broader move away from defensive funds. Carne says they felt it offered a more strategic play on Asian markets.

Sun also manages the Veritas China fund, which is a long/short Chinese equity product targeting annualised returns of 15% to 20% with a volatility of about 15%, and the Real Return Asia fund, a long/short equity fund that invests across the Asia Pacific region.

While Richardson points out that the group is investment-led, there is also a marketing aspect to any investment business.

As such, Veritas brought in Richard Meyrick from JO Hambro Capital Management in 2008 to head its sales team. The timing of the move suggested that having built up track records in some of its core offerings the group was preparing itself for a concerted push to increase assets under management.

Meyrick says: “There was definitely a conscious decision that now was the time to invest in the commercial side of the business, which is why I was brought in.

“People want to understand the story that they are buying into, and if clients can understand the story they will be more comfortable buying into it.”

The addition of Meyrick certainly appears to have had an effect. Only 18 months ago the group had under £1 billion of assets under management but by June last year this had crept up to £1.2 billion.

Since then the group has more than doubled its asset base, so that at the end of June it had grown to £3.2 billion of assets under management.

Of this, £1.5 billion is managed by the global team, £1.3 billion by the Asian team and the balance is in the private client business.

Such a surge in asset build-up suggests that investors are satisfied that Veritas has proved the value of its products through a variety of market conditions. Indeed, Richardson says that surviving the financial crisis provided a chance to prove the resili­ence of the firm.

Of course, with the rapid pace of its growth Veritas could leave itself open to fears that scale might start to affect performance. This, however, is a concern that the group is eager to quash.

“Not many advisers would tell an asset manager to close a fund to new investment,” Richardson says. “They would tell you that if you close your fund you lose your franchise and you should ’make hay while the sun shines’.

“The interests of the clients and the investment teams, however, can sometimes be better served by closing products to protect performance, and we are very much in the latter camp.”

While many others in the industry are still recovering from one of the worst financial crises in living memory, the problem of having too large an asset base is one that many groups would be happy to contend with.