At a time when the asset management industry is in retreat, with redundancies announced and mergers contemplated, Tom Caddick is hoping to capitalise on the turmoil to grow his firm.
Caddick, UK managing director of Nedgroup Investments, says when he sees a merger happening somewhere, "my eyes light up", due to the opportunities he feels it presents to poach disaffected staff.
Nedgroup Investments, an outfit that is seeking to grow within the UK adviser space, is a division of a South African bank.
While they have a range of multi-asset funds, the bulk of the UK operation is in what he calls “best-of-breed funds”, where Nedgroup appoints an asset management company to run money for its clients, but the funds are branded Nedgroup and only Nedgroup clients can access the funds.
Typically the asset management firm that wins this contract must agree the product they create for Nedgroup is exclusive to Nedgroup in Europe.
But one area where he is trying to grow is the hiring of individual fund managers, often disaffected employees of other firms, to launch funds within Nedgroup; he says it is for this reason that when he sees a merger, he believes there is an opportunity to hire staff unhappy with their lot.
As part of their push into the UK market, a sales team is being built out.
Next generation
The first internally managed fund to be launched is a bond product run by former Liontrust and Kames manager David Roberts and former Artemis manager Alexandra Ralph.
He expects more such hires, saying that many of what he regards as the best managers will be attracted to working at Nedgroup because all of the remuneration earned by managers is linked solely to the funds they run, rather than to the performance of the wider business.
Caddick says many eminent fund managers would, in previous decades, have desired to set up their own businesses, but now find the regulatory burden too onerous to make that viable for most, and so he sees an opportunity to hire those people as employees.
Despite his positive view of individual active fund managers, Caddick says there are too many active funds, and too many fund managers content to underperform for short periods on the basis that over an unspecified longer period of time they will be proved right.
Caddick says such views represent "intellectual arrogance, of which there is a lot in our industry. Too many people use language and terminology designed to reinforce their own view of their own intellect, but that doesn’t really help clients.
"There are too many active funds and it gives active fund management a bad name. A lot of active products are basically zombie funds, they haven’t grown to the right scale and don’t perform very well and so are dragging down the average for active funds in general."
Caddick says that when professional investors talk about 'spreads and curves' in relation to bonds, this does not help the end client, as their reason for investing in the first place is more outcome-focused.
