Nature vs Nurture: Crux’s Richard Pease

John Husselbee, Liontrust

Charisma is a fascinating quality, one which can bring out some odd behaviours in others. Richard Pease certainly has charisma in abundance and, after having been slightly surprised that he agreed to my interview request so readily, I must admit that I was feeling like the proverbial cat on a hot tin roof on the morning of the meeting.

Pease is a fund manager at Crux Asset Management, having begun his City career 30 years ago at the Church of England Central Board of Finance before building his reputation at Windsor Investment Management, Jupiter, New Star and Henderson.

Charisma is an attribute that is very common among fund managers. It is defined by the Oxford English Dictionary as ‘a gift or power of leadership or authority; aura. Hence, the capacity to inspire devotion or enthusiasm’. Given the necessity to attract and retain assets, it is obvious why an ability to inspire belief in one’s ‘followers’ is a desirable trait in this industry.

In keeping with the theme underlying the interviews in this series of articles – I wonder whether charisma is something one is born with or develops. At first glance, he seems to the manor born; Pease is a member of the Pease family Quaker dynasty, whose fortune was made during the industrial revolution and who have been prominent in industrial and financial sectors since.

His father, the third baronet of Hammersknott, was vice-chairman of Barclays Bank and Pease’s siblings have also gravitated towards the financial sector in their professional and personal lives, so it’s hard to tell if Richard’s characteristics are in his blood or whether his family status would have imbued him with self-confidence and assuredness.

This assuredness has been a key component of his success and is one of the reasons he gelled so well with John Duffield. The two met in the early 90s and it was Pease that proposed he move to Jupiter to start a European desk, which marked the beginning of a 17-year working relationship.

Duffield’s management style, of course, has been extensively scrutinised and Pease confirms that he was very focused on fund performance. The key for fund manager survival was to show Duffield that they had absolute belief in their views and portfolio positions and knew the reasons for short-term underperformance, says Pease. Fund managers came under “double pressure” if they did not show total confidence.

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Pease is quick to point out the counter-cyclical nature of the requirement for a fund manager to exude calmness and confidence: “It’s human nature that when you’re doing badly you’re less confident, but that’s when you’ve got to do the most marketing and reassuring.”

Pease has certainly done well over his three decades of investing, building up a very impressive track record, although not one without setbacks; he famously apologised to unitholders in the New Star European Growth Fund for its weak 2007 performance.

While his career has been a success story, he is unabashed in his recognition of the role that family contacts played in giving him a head start in the industry. After an abortive beginning to his career at property group Knight Frank – a role which his parents had cajoled him into – his uncle secured him an opportunity at the CoE Central Board of Finance.

In an echo of a message that has been consistent throughout this series of interviews, Pease recognises that such a route into the industry is on the wane, but he still values the social capital that can be derived from hiring via contacts: “I don’t necessarily want to interview 25 people for a job. What am I going to learn about them in an hour?”

Earlier this year, he recruited for Crux one of the brightest prospects he has seen in his time in the industry – Roland Grender, son of GAM fund manager Gordon Grender. Another individual who was potentially born into the role, Roland impressed during an internship and Pease says he would have hired him on the spot had he not still been studying.

What impressed me during the couple of hours I spent talking with Pease is his love of the job, particularly stock research. This has evolved substantially since he first came into the industry and carved out a niche in under-researched European mid-caps, which were akin to an emerging market at the time.

He started out in 1984 and I would have little hesitation describing him as ‘old school’ in his manner, which includes a certain resistance to change. His move from Jupiter to New Star was driven by his relationship with Duffield rather than a desire for a new challenge, and when he became part of Henderson’s subsequent rescue of the company he kept as much of his Knightsbridge set up as possible.

He is happy to bring in young analytical talent to help with technology and internet plays, and in his leisure time displays an appreciation of traditional pursuits rather than technological advancement; you won’t find any Kindles or iPods in his study.

But he is a shrewd operator, a facet which was well displayed when he moved across to Henderson, as he inserted a “pre-nup” that allowed him to take his £1.2bn fund with him when joining Crux.