Chris Ralph, a partner at Maia Capital, talks to Adam Lewis about the recently launched boutique.
Q: What tempted you and your Maia partners to leave Fidelity to create the new boutique? A:
A:It was simply that all three of us (Jason Collins, Simon Mungall and I) wanted to participate in a business in which we had partial ownership.
In our roles at Fidelity we had the opportunity to meet lots of fund management companies and examine their business models. We believed the model Resolution used in the past to create boutiques was attractive and we became interested in working with them when we found out they were interested in moving into multi-manager. While it is still early days, we are happy with the decision we made.
Q: Just after it was announced that you were leaving to join Resolution, there was talk of an F&C takeover. Did this concern you? A:
A:As we own 50% of the Maia business we have a significant amount of involvement in any decisions as to its future. We also have a change-ofcontrol clause written into our contract. Before the deal to join we also did a lot of due diligence into Resolution’s prospects and we were aware that at some stage there was the possibility of corporate activity in the company.
We were surprised how quickly the F&C takeover talk happened, but the Pearl offer presents several interesting opportunities and we are keen to participate in it.
Q: You have launched three funds to start with – Cautious, Balanced and Growth. Why did you plump for these and are more funds likely to follow? A:
A:We wanted to put down a marker to say to the investment community that we are here and we have started. The three funds, which launched at the end of October, offer a mix of strategies that are appropriate for a wide range of investors. We felt that there were clear opportunities in the cautious, balanced and growth spaces and it seemed logical to start there.
We are always interested in looking at new opportunities, but they have to be cognisant and not over-complicate the product range and not remove our focus on the successful management of our core competencies.
Q: Are the funds fully invested and were they seeded at launch? A:
A:Yes the funds are now fully invested. We had an internal client give us £150m, but this was not seed money. Seed money implies we will have to give the money back at some stage, this was an actual investment that could be in the funds for some time to come.
Q: Is the way you manage the funds similar to the way you did it while at Fidelity? A:
A:One of the lessons we learnt while at Fidelity was to ensure we demonstrated true conviction in the three new portfolios. As such, compared with the funds we ran at Fidelity, the Maia funds hold a smaller number of underlying funds. For example, at present our growth portfolio holds four UK equity funds, whereas in the past we would have held more.
All the funds have a target range of 15-25 holdings but at present we are at the lower end of the scale. While we ensure there is adequate diversification in the funds, we also want to make sure we are expressing our views in a positive way.
Having a substantial stake in the business is also different to Fidelity, where it is difficult to make a difference to the totality of such a large business.
Q: What types of underlying funds are you including in the portfolios? A:
A:At present we have a mix of equity and bond funds in the three portfolios. However, within these asset classes we are following a number of themes.
The first is our allocation to global equity funds. We think there are lots of interesting opportunities in this area and the funds have allocations to Artemis Global Growth, Edinburgh Partners Global Opportunities and Fidelity Global Special Situations. We think these three funds are strong propositions and work well together as a unit.
We also think the way we allocate to fixed income makes us different to other multi-manager funds. This is because with have nothing allocated to conventional sterling fixed-income funds, such as UK corporate bond funds. Instead we use more specialist managers in specialist areas of the fixed-income market. For example, in the high-yield space we use Bluebay and in the absolute return space we use a hedge fund strategy managed by Crédit Agricole.
Q: How high is turnover in the funds? A:
A:We very much adopt a buy and hold strategy. As a result turnover in general will be low, meaning less than a third or a quarter in any 12-month period.
Q: How do you and your partners share management responsibilities on the funds? A: A:
Q: What do you make of the suite of 130/30, climate change and infrastructure funds that have been launched this year?
A:We are all equal partners so we have equal responsibilities to ensure the business is successful. While we all have our areas of expertise we have adopted a general approach to our research so we share out the responsibility.
A:We will consider any fund for inclusion in our portfolios. However, we will want to make sure what the said fund will bring to the portfolio, and the way it will generate outperformance and how it is different to other funds on the market. 130/30 funds could easily be misunderstood and I don’t think there has been enough research done on their structure and the returns they may be able to generate.
My question with climate change funds is: are they truly different to other funds I may hold, or are they just correlated beta? I have also spent time looking at infrastructure funds and my conclusion for both these and climate change funds is that there are currently better opportunities elsewhere.
Q: How do you feel being advertised as a superhero? A:
A:A super-heroine more like! One of the opportunities we felt that working with Resolution would offer was access to its Superhero brand. To date, this brand has been associated with success, and we want to continue this.
We have the poster of Maia [a Greek goddess – the mother of Hermes] up on our wall and it has provoked a lot of interest in the brand and in ourselves as fund managers.