Gartmore rebuilds with top talent

After suffering a difficult 2008, Gartmore could have just waited for things to get better. Instead it is recruiting vigorously to restore its former strong position in the market, writes Muriel Oatham.

Gartmore is a global fund manager with its headquarters in London and offices in Boston, Frankfurt, Madrid and Tokyo. Gartmore has more than £17 billion of funds under management.

“It is more than about hiring fund managers. It is about Gartmore and its position in the retail market,” says Richard Pursglove, the head of UK retail at Gartmore, of his firm’s activity over recent months.

Pursglove says he arrived at the group in March 2008 “with a very clear remit: to reposition and rebuild Gartmore’s position in the British retail market”.

“Gartmore was a very prominent brand in the 1980s and early 1990s,” he explains. “But whilst there was still huge affection within the industry for the brand, its profile had waned somewhat.”

This has certainly changed over 2009. The group has launched two new funds, the first in six years, and made nine senior hirings in fund management and distribution.

Pursglove says that the “horrendous markets” of 2008 offered fund groups two choices. “You could either hunker down and wait for things to get better, or take advantage of a fantastic opportunity for investment.”

There is no doubt which option Gartmore has chosen, with the headline-grabbing hirings being met by “an overwhelming client response. Our long term plan is to position the business to build market share,” says Pursglove, “and you need to bring in the best fund managers in the industry to do that.”

Gary Potter, co-head of multi-manager at Thames River, says that while Gartmore “had to do something”, this strategy is sound. “Gartmore really have to make a play for growing assets,” he says, “and they are clearly making a go of it. They are hiring people to diversify the business and put them on a more even footing.”

Ben Yearsley, an investment manager at Hargreaves Lansdown, agrees with Potter’s suggestion that Gartmore needed to diversify. “They have got to prepare for the day when Roger Guy is not there,” he says, “and the new hires show they are trying to get away from their reliance on him.”

This year, John Anderson, John Bennett, Leigh Himsworth, Luke Newman, Dan Roberts and Kam Tugnait have joined Gartmore’s fund management team. Pursglove says that each of the new recruits has a proven track record and specific expertise in their industry.

But he acknowledges that the restructuring, on both the credit and the British desks, has been driven by “disappointing performance prior to the new hires. We needed to address the cornerstones of the British retail market,” says Pursglove, “and have started with the areas it is crucial to get right.”

“John Anderson, in fixed income, has 20 years’ experience and an astonishingly consistent track record. We were fortunate that he was able to bring his fund with him.” Anderson’s Rensburg fund is now the Gartmore Corporate Bond Fund.

“And Kam Tugnait, who is new to retail but has an ­institutional track record, will be a very good complement to John,” he says.

So what is Gartmore doing to support its new arrivals? “We can give them the support of a larger team, allow them to continue to deliver consistently and build on prospects for further product development in the future,” says Pursglove.

Pursglove has a clear ambition for the UK equity team. “We now have exceptional managers with experience and track records,” he says, “and a range of funds that cover the full risk spectrum, from absolute return through to growth.”

A key appointment was Leigh Himsworth from Royal London Asset Management, who joins this week as Gartmore’s head of UK equities.

Himsworth will have both team and fund management responsibilities. He will ­eventually run two portfolios, the UK Focus fund, which will be renamed the Gartmore UK Alpha fund, and the Gartmore UK Growth fund, which the group is redesigning for him.

But the group is not just hiring managers with long-term experience. “In Dan Roberts we think we have found one of the next generation of leading fund managers in UK equity income,” says Pursglove. “He has a good track record, and now will have a brand which will have the potential to attract significant assets.”

Potter says this is an interesting hiring. “Dan Roberts had a good couple of years at Aviva, but has staked his personal reputation on this move.”

Potter describes UK Equity Income as “a very competitive sector. Roberts will need to be convincing to get people to change their buying habits, to move away from Schroders, Neptune, Artemis and Invesco,” he says.

Pursglove is undeterred. “Of course I want Gartmore funds to have greater representation in the multi-manager space,” he says. “We have made a very good start, but we know it is just the start.”

Potter and Yearsley are observing the new arrivals with interest. “We are watching with a keen eye to see how they get on,” says Potter. “Each hire makes sense, individually each manager has delivered. But it is now about seeing how the whole thing gels together.”

Yearsley says: “They have some good guys and they have recruited interesting people. It looks like they are doing the right stuff, so I hope it all works.”

“The new hires are not yet there in terms of must-haves,” he adds, “but give them time and they could become so.”

Pursglove is keen that the new arrivals do not overshadow what he calls Gartmore’s “business as usual”. Many of the firm’s existing managers have been in place for over a decade.

Roger Guy and Guillaume Rambourg aside, both Yearsley and Potter single out Chris Burvill, on the cautious managed side, for particular praise. Potter is also enthusiastic about Ben Wallace and Luke Newman, who he describes “as a very capable duo on absolute return.”

While Potter does not hold any Gartmore funds at ­present, he says “a number are contenders, certainly the absolute funds.”

Pursglove is understandably enthusiastic about the Absolute Return sector. “The launch of the European Absolute Return fund at the end of January was our first fund launch since Chris Burvill’s cautious managed fund six years ago,” he says.

Gartmore entered the hedge fund market in 1999, and its AlphaGen Capella fund is approaching its 10th anniversary. “After rapid growth in our hedge fund business, it was a natural progression to get absolute return into our retail products,” says Pursglove.

The European Absolute Return fund was followed with Ben Wallace’s UK Absolute return fund. Launched in April, it has reached £150m to date. Purglove says he is “not at all surprised” at the way this ­sector has taken off.

“There is no doubt that what absolute return funds do, drastically reducing volatility, makes them attractive to investors looking for diversification and reduction of risk,” he says.

Gartmore had hoped to launch a third absolute return strategy in 2009, but this has been pushed back to the first quarter of next year.

So what else is in store for 2010? “There is plenty to do in establishing our new managers, but also more to do in terms of appointments,” says Pursglove.

He admits the past 18 months have been hectic. “But if we can maintain anything like this momentum over the next five years, I will be very satisfied,” he says.

Yearsley is optimistic. “Gartmore are competent but they have not yet made that leap to excellent,” he says. “But they are putting resource into the right areas.”

Potter agrees. “Gartmore are going in the right direction,” he says, “and there is a good management team in place. If anybody can make a go of it, Rossi, Wagstaff and Pursglove can.”