Front runners in the retail revolution

Cazenove Capital Management is well advanced with preparations for the Retail Distribution Review, with a key new appointment and a mission to educate IFAs, writes Neal Underwood.

Cockerill has also used the European fund. “It’s got a larger-cap focus and is more conservatively run. It’s a good, high-quality fund. Through the cycle we’ve seen in the market, it went into that as a good performing fund and came through and out the other side. That’s to be applauded; to have maintained consistent performance is not bad at all.”

Likewise, Cockerill views the UK Corporate Bond fund as conservative and reliable. “Like the other two funds mentioned, it’s not very exciting but you know what you’re getting, how it’s going to perform. They’ve delivered on that.”

The European fund has gathered the most assets so far this year. “We happen to have one of the most pragmatic relative value investors,” says Minter-Kemp. Thenext best seller has been the Strategic Bond fund, managed by Peter Harvey, with Multi-Manager Diversity, run by Marcus Brookes and Robin McDonald, the third highest.

Minter-Kemp highlights the latter fund’s focus on investing using a multi-asset approach, guaranteeing a spread of investments and seeking some inflation-proofing.
“Across the board we’ve seen massively lower expectations for returns and lower appetite for risk assets,” he says. “Full-blown equity exposure is not raising its head.”

Gary Potter, a co-head of multi-manager at Thames River Capital, holds positions in the European and Strategic Bond funds, as well as UK Absolute Target. He has also met Robin Griffiths who he describes as a useful technician on the economic side. “Chris Rice is also a long-standing association.

”You can’t be obscure and be welcomed with open arms by investors”

“Performance numbers have perhaps not been up to the best standard in the last 12 to 18 months, but they stick to fundamentals and I applaud that. They didn’t waver and that’s to be admired. They’ve been caught a bit with the volatility of the market but there’s a lot of people in the same camp. They’re in the right place and will bounce back – ­fundamentals will come through.”

Absolute return strategies are another key focus. “We manage a significant amount of assets [in that strategy],” says Minter-Kemp. The retire­ment market in particular is a huge market, and one that has exposed itself to far too much risk. It should be about protection of wealth.

“Unfortunately the pioneering of the Absolute Return sector coincided with the credit crunch; a strategy to beat cash with a much lower-risk profile than equities should work unless markets become extremely skewed on valuation.” This is currently the case, hence returns from the firm’s absolute return strategies have been, in his words, “quite dull”.

“Our fund managers are cynical about valuations on operationally leveraged companies,” says Minter-Kemp. “We’ve not played the recovery. The emphasis is on protecting capital rather than making money.”

Asked about expanding into other areas, Minter-Kemp says the firm has maintained from the day he arrived in 2003 that it wanted to aspire to running a small amount of assets on a finite basis and wanted to price funds accordingly. “We ­didn’t say we would always be only Pan-European. It’s an organic, fluid process where you need an open mind.” He adds that bringing in teams, rather than individuals, tends to work ­particularly well.

Minter-Kemp would like to diversify Cazenove’s client base. “Whenever you build a business like ours, looking back over eight years, the approach was to go to the most impressive asset gatherers and impress them with our ­credentials. That was the plan ahead of building assets and track records. We want, as economically as possible, to dilute that capacity to the broader retail market and outside the UK. We want assets to be diluted among as many shareholders as possible, allowing us to offer the right products.”