Having reached its seventh birthday, Credit Suisse Asset Management Funds (UK) is looking to speed u...
Having reached its seventh birthday, Credit Suisse Asset Management Funds (UK) is looking to speed up its expansion plans if it is to reach its goal of being one of the top 10 retail investment groups in the UK over the next three to five years.
On current figures Credit Suisse Asset Management, which was rebranded from Buckmaster seven years ago, needs to quadruple its funds under management to around £6bn to enter the top 10 retail investment groups. Its giant Swiss parent company, Credit Suisse, is prepared to bankroll acquisitions to aid this expansion in funds under management, although the group has found that at current prices this strategy may be too expensive.
Credit Suisse Asset Management Funds (UK) was set up in 1993, seven years after the Credit Suisse Group acquired stockbroking business, Buckmaster & Moore, which had a range of UK unit trusts managed by Bill Mott.
In 1993 Buckmaster had £62m in unit trusts of which £61m was private client money and only £1m was external. The Credit Suisse Group decided it wanted to win more external money and market its UK unit trusts, which had a strong performance record under Mott's management.
Ian Chimes, then deputy managing director of Hendersons' unit trust business, was recruited to head up the retail drive as managing director of Credit Suisse Asset Management Funds (UK) and the rebranded company opened for business on 19 July 1993. The five Buckmaster UK unit trusts were rebranded Credit Suisse Income, Smaller Companies, Monthly Income, Growth and Fellowship.
Chimes said: "Buckmaster had won a few awards for small unit trust groups and it was decided that this business had growth potential. The performance of the funds was good but there were no fact sheets or literature and no-one was manning telephone inquiries for example.
"My remit on joining the group was to rebrand the company from Buckmaster to Credit Suisse and secondly to attract external new business from the intermediary community in the UK. So we hired two sales people and started to build a management team.
"We hired Mark Thomas from Scottish Widows to cover the Northern region and he is now sales director. We also hired Ian Day, now at BFS, to cover the South. Around early 1994 we decided our goal would be to get two Credit Suisse funds onto the buy list of every intermediary in the UK. The view we have always taken is that on an independent panel, brokers are always going to want to have funds from several groups. If you can get two funds onto the buy-list you can get a lot of ongoing business."
In a bid to broaden the fund range, Credit Suisse launched its Orient fund in December 1993, followed by Credit Suisse Transatlantic in January 1994. Credit Suisse took in around £15m for each of the funds and then turned to focus on marketing UK funds, with a 15-month marketing campaign aimed at getting intermediaries to meet Mott and understand his investment philosophy of making big macro-economic calls to drive portfolio performance.
On the back of its fund launches and strong UK performance, Credit Suisse saw its funds under management grow exponentially, rising from £62m at launch to £200m by February 1995, which doubled to £400m by November of that year.
On the UK side, money was flowing into its two equity income funds and by April 1996, unit trust funds under management reached £600m, rising to £800m by January 1997 and going through the £1bn mark in July of that year.
Over the next two years, the group's strong growth began to slow, hit particularly by underperformance in the UK funds, which was affected by Mott getting one of his big macro calls badly wrong.
Before the 1997 General Election, Mott decided sterling would weaken in the event of a Labour victory and also that the small and mid cap areas of the market would thrive in this environment. The UK portfolios were positioned to take advantage of this but sterling did not weaken when Labour took power and Credit Suisse's UK portfolios were underweight FTSE 100 stocks as large cap companies began to roar.
This strategy led to 18 months of underperformance in the UK funds up to the end of 1998, as many of the mid and small cap stocks in the portfolios fell back while many large caps rose to new highs.
Chimes said: "We had a look at the UK funds in 1999 and took a decision to keep the portfolios more closely aligned to the benchmark, which lead to the funds staying in mid-table, producing lower second/third quartile performance. That does not bring you substantial sales when the competition is so hot. For about two years our UK funds were becalmed, after having been used to creating units every day. Sales in these two years were pretty much neutral, what we were getting in was going out."
To tackle the UK performance problem, Phil Harris was hired from Threadneedle to manage the small cap fund, while Trevor Green took over the growth fund, with Suzie Kemp heading up the Fellowship trust. More recently, Mott has gone back to running the two equity income funds he managed between 1986 and 1996, taking over from Dominic Wallington, and have seen a strong improvement short-term performance.
European performance has also been a problem for Credit Suisse recently.
Patricia Maxwell-Arnot was hired from Lazards by the group in January 1995 and the group's European fund took in money through the second half of the 1990s. But Maxwell-Arnot missed out on the boom in new economy stocks in Europe though 1999 and 2000, which saw the fund drift down the performance tables. Maxwell-Arnot left the group earlier this year and the fund is now being run by Raj Shant, who is looking to boost analysts' coverage of the European markets.
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