Profile: Liontrust’s John Husselbee on running a business vs running money

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John Husselbee gained the “Huss” moniker when he joined Rothschild’s private client division a few years in to his career. He stepped into a department of eight with three other Johns and his childhood nickname was reborn.

It is one that has stuck with Husselbee throughout his 30-year-plus career – a career that has led him to be one of the most highly regarded multi-asset and multi-managers in the industry.

He did not take the standard route into the industry that most fund managers now have to tread, gathering qualifications and experience before being granted a job in the City. Instead, Husselbee shunned his place to study accountancy and business studies at Exeter University and joined Rothschild Merchant Banking on its apprenticeship scheme.

It was his grandfather that prompted his early interest in markets. Husselbee says: “Every day, my grandfather would do two things: first, buy a copy of the FT and look up the value of his shares; and second, go to the bookies to study the form that day. Being inquisitive, I asked about both: what he was investing in and what he was betting on.”

A three-year internship at Rothschild resulted in promotion to become the youngest assistant manager the merchant bank had ever had. But that was not enough for Husselbee. He turned down the role in favour of a one-year rotation around the business before settling on the private client division.

The move shaped the rest of Husselbee’s career, leading him to build up the bank’s portfolio service at a time when most high-net-worth investors held individual stocks rather than more diversified funds. But it was not all smooth sailing, with the portfolio service funds launching in July 1987 before the October crash.

“It took about three or four years for the funds to recover their value. It was a classic case of buying high and selling low,” says Husselbee. He went on to launch Rothschild’s first multi-manager portfolio service.

“Typically, investors were in funds with very little diversification on offer, while we were offering diversification by asset class, geography and manager. It suddenly took off because we were doing something really different,” he says.

At this point market leader Henderson came calling and, after more than 10 years at Rothschild, Husselbee moved on to the asset manager. He believes the big shifts in the industry and asset allocation result from changes to either taxation, regulation or technology – and sometimes all three.

It was the changes to capital gains tax shortly after he joined Henderson that shaped Husselbee’s time there, shifting investors towards fund of funds and away from portfolios. From here, Husselbee launched one of the first fund of hedge funds, making the asset class more retail-friendly.

Ultimately, however, it was technology that led him away from Henderson because the advent of platforms saw the fund manager lose market share.

“It was not going to get on platforms without something different or bigger, so that was quite frustrating,” he says.

After nine years at Henderson, Husselbee decided to go it alone. He launched North Investment Partners in conjunction with Neptune Investment Managers and after a couple of years a management buyout saw the firm break away.

“We offered distributor influenced funds and built a business in outsourcing. We were very much in a sweetspot and assets grew very quickly,” he says.

The advent of RDR and pressure on distributor influenced funds and pricing pushed the company back into model portfolios, using risk-rated measures rather than just performance outcomes.

“But running a small investment firm was becoming a bigger and bigger burden, and I was spending more time running the business and not running money, which I didn’t enjoy,” he says.

After a beauty parade of the business and discussions with six asset managers, Husselbee and Liontrust agreed a deal in 2013 with the asset manager acquiring North, which had around £100m in assets. Paul Kim joined at the same time to work with Husselbee on the multi-asset propositions.

That £100m has since grown to £500m, with Husselbee identifying the direction of the market as towards risk-targeted portfolios and envisaging major growth in the space. He says: “Risk-based is what suits the UK today. It fits with advisers for suitability and with what the regulator is asking them to do. We started with risk and then built 10 strategies on 20 asset classes: 10 equity, five bonds, four alternatives and cash.”

Husselbee says the focus on risk means he works closely with Liontrust’s head of risk, mapping out investments, assessing new asset classes and stress testing portfolios. He then applies a tactical asset allocation on top, using algorithms to identify asset classes to add to.

He has expanded the range to 26 portfolios: 10 with a growth focus across different risk ratings, 10 low-cost ones that use more passive vehicles and six with an income focus.

Learning from his Henderson experience, Husselbee has focused on getting the portfolios on platforms to boost distribution and assets. He says: “We had no exposure on platforms until mid- to late 2015 but small and mid-sized adviser firms want to see you there, so we now have the risk-rated 1-8 portfolios on nine platforms.”

This has brought challenges with platforms not fully equipped for discretionary managers.

“It means we have to apply their rules of investing but it’s important to me that clients all receive the same portfolio and performance, whether they are on or off platform.”

The next stage of growth is to boost the outsourcing tie-ups in Husselbee’s team. In July, Verbatim Asset Management, part of the SimplyBiz Group, appointed Liontrust to manage its range of five growth funds. Husselbee’s team was already running two of the portfolios and he says more is to come.

“We will grow through outsourcing. We firmly see our growth in the retail market.”

However, with more than three decades of industry experience and an entire career in multi-asset, does Husselbee dream of retirement or of doing something different?

“I still have a great passion for this job; it’s really easy to enjoy it because it’s always changing. I’m still hungry to never stop learning.”

CV

2013-present: Head of multi-asset, Liontrust Asset Management

2005-2013: Chief executive officer, North Investment Partners

1996-2005: Director of multi-manager investment, Henderson Global Investors

1985-1996: Various roles from apprentice to fund manager, Rothschild

Five questions

What’s the best advice you’ve received in your career? Listen to what clients want; they keep you in check.

What has had the most significant impact on financial advice in the last year? The ongoing work into suitability and clearly targeting risk for investors.

What keeps you awake at night? My dog at 4:30am. But otherwise I think if you accept you are investing over the long term and there will periods when it will do well and periods when it will not, then nothing should keep you awake.

If I was in charge of the FCA for a day, I would… Focus on younger people and the importance of financial education.

Any advice for new fund managers? It is important to get as much experience as possible of different styles and approaches in order to understand how the industry works and what suits you. In a world of instant gratification, patience is also vital.