Framlington has recruited Rathbone's frAA-rated Roger Whiteoak to run its UK small cap unit trust. ...
Framlington has recruited Rathbone's frAA-rated Roger Whiteoak to run its UK small cap unit trust.
Whiteoak will head up the UK smaller companies desk consisting of Brian Watson, Alice Ryder and Chris Bell, responsible for some £750m in assets under management. In addition to being lead manager on the £110m Capital Trust he will also help Watson to run Throgmorton Investment Trust.
Capital Trust was previously run by Catherine Stanley who left Framlington in August to join Equitable Life, since then it has been run by the small cap team as a whole.
Whiteoak, who will report into Neil Birrell, head of specialist funds, ran the Rathbone Smaller Companies and Rathbone Capital Growth unit trusts.
He joins Framlington on 4 December and the group intends to relaunch the unit trust to the intermediary market in the new year.
Craig Walton, marketing director at Framlington, said: "We are well known on the institutional side and on investment trusts where we have got the largest small cap trust. But in the unit trust world the Capital Trust has £110m but IFAs do not think of Framlington as a smaller cap manager."
The fund's performance has not been impressive in recent years. Over three years offer to bid it is ranked 38 out of 67 and over one year it is 52 out of 74.
Framlington has been moving to identify strong sector and theme influences in portfolios while still emphasising the importance of stock picking, and Birrell is confident that Whiteoak's investment style will fit in with and add to this.
Birrell said the small cap team investment style was to take a bottom up approach. He added: "In sector terms Capital Trust has taken reasonably big bets and there is no reason why that cannot continue.
"Roger will bring his own particular style which is not just bottom up, he has also got a global approach and takes a top down view. He has had success by investing in technology and biotech at Rathbones and so he brings further experience to our team."
While at Rathbones Whiteoak worked alongside Hugh Priestly, who Fund Research singled out for providing a strong top down back up for Whiteoak's process.
Birrell said: "We hope to give Roger as a fund manager everything he needs to produce good performance. From a top down perspective we have a chief investment officer along with specialists in a number of sectors.
"We are increasingly leveraging off the skills of the likes of Anthony Milford on health, the technology team and our financials expertise."
Whiteoak's arrival represents an ongoing effort by Framlington to build up its UK and pan European small cap expertise.
He joins as a director of Framlington Investment Management, the first time in five years a fund manager recruit has gone straight onto the board. The last two were Birrell and Paul Branigan who both joined in 1995.
Birrell said Framlington was looking to recruit further but had yet to decide whether it needed more analysts or fund managers.
In addition the group has added a senior dealer to its dealing desk. Walton said: "He has has 29 years experience with Kleinworts, specifically among specialist, tech and smaller companies."
Framlington's aim is to build up its strength as a niche player rather than try to become a mainstream investment house. In 1996 the group had £2.4bn under management and this has now risen to £5.5bn.
Birrell said: "We need to ensure small cap remains a big area for us. We are specialist equity investors, for example with our US funds, NetNet, health, financials and UK smaller companies."
Since June Framlington has recruited Stephen Payne from Hill Samuel to work on split caps and UK income, Mark Hargraves from United Assurance as a European fund manager, Nick Evans from Hill Samuel to help on technology and Vanessa Guez from Credit Suisse First Boston as a European analyst. Walton said HSBC's recently taken majority stake in the fund manager was unlikely to herald a change Framlington's direction.
Framlington was originally 51% owned by French bank CCF, which HSBC has bought, with a 49% minority owner in US mutual funds group Munder.
He added: "In the last few years HSBC has shown itself more prepared to have a stake in a business rather than own it 100%.
"It has stated its view it wants to maintain the same relationship that CCF had with Framlington, namely a supportive share holder while we have access to their distribution."
In Europe CCF's distribution, which Framlington already links to, is to be used as the basis for HSBC's private banking distribution. Walton said the group was still in discussion with HSBC on using its distribution in the UK.
Framlington's latest venture with Munder is to launch a mutual fund into the US market in November, investing in biotech. Walton said there were no plans to make a version of it available to the UK market.
He said Framlington had been looking to acquire assets under management in the UK.
Walton said: "I cannot say we have seen a business we thought was reasonably priced. At a time when our own organic growth has been so rapid it is quite hard to pay up for other people's growth when yours looks better."
Birrell said: "We do not want to integrate fund managers with different investment styles at a time when ours is going so well."
The £68.5m Rathbones Smaller Company fund is ranked 40 out of 75 funds in the UK smaller companies sector, on bid to bid returns of 16.2% over the three months to 6 September. The fund has fared better over longer time periods, returning 56.2%, on a bid to offer basis, over one year to 6 September, compared to sector average of 45.6%. It is ranked 1
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