Stuart Paul takes on Scottish American while Derek Lygo heads up UK equities
First State Investments' head of UK equities, David Shaw-Stewart, and senior UK manager, Marcus Brooks, have departed the group. This follows the arrival of Derek Lygo from Dresdner RCM as the new head of UK equities.
Stuart Paul, chief investment officer at First State, said Shaw-Stewart and Brooks were both involved in the decision to take on Lygo and decided to step-aside to let him have a free hand.
He said the company has been trying to improve its UK equity business and said Lygo's appointment will bring some creative thinking to the whole asset class and can improve the group's product offering across the board.
Paul added: 'In the UK, we did a complete review and recognised the need to strengthen the team. We have also been looking at our products and there is every likelihood we will give Lygo a UK mid-cap fund to run.
'At the moment, we are regarded as a leading niche fund manager, Lygo's appointment will bring leading products into the more core areas, such as UK equities.
'Lygo has demonstrable experience in the UK asset class with his AA-rated UK Mid-Cap Trust, and A-rated UK Growth Trust, both of which are top quartile over three years.
He will also have a remit to review and further strengthen the team.'
Colonial First State UK All Companies, run by Martin Cobb, is ranked 174 in the All Companies sector over 12 months to 1 August, returning -18.02% against a -15.98% offer to bid return for the 290 strong sector average. The Colonial First State Smaller Companies fund, run by Kate Tidbury, has also underperformed. It is ranked 34 out of 72, returning -20.87%, compared to the sector average -22.85% over the same time period.
Brooks also ran the Scottish American Investment Trust, which will now be managed by Paul until First State is able to appoint a replacement manager. Paul has also been working on refining the group's investment process, following the acquisition of Stewart Ivory last year. He said the key aspect was that both groups' investment processes are essentially the same, sharing a belief that earnings per share growth drives stock prices in the long term.
He added: 'We are both were bottom-up stock pickers, adding value through global sector analysis, so we were on the same page philosophically. The process I have been continuing to refine is on earnings growth, quality of assets and ensuring we do not overpay for growth.
'What I am trying to do is to create an environment where people understand how we apply our investment process.'
Paul has created a standard research template that lays out a series of questions to prompt managers to ensure they have considered certain areas of investment before the decision to invest in a company is made.
He said: 'So much of the market is forward looking. There is not enough regard for the earnings power of companies over the full economic cycle. This may be found by looking back at a company over five or seven years.'
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