Adrian Frost is considering a switch to global equities if he returns to Deutsche Asset Management f...
Adrian Frost is considering a switch to global equities if he returns to Deutsche Asset Management for the long term following his forthcoming six month sabbatical.
In an interview with Investment Week, Frost, who starts a sabbatical on 1 April, said his future role with the group would not be decided until the autumn.
He is stepping down as manager of the AA-rated Deutsche UK Equity Income unit trust, the Deutsche Equity Income investment trust, the pension mandates he runs and giving up the post of head of UK equities.
He has indicated an interest in running global portfolios in the future.
Frost said: "This is an issue. The career of a fund manager terminates somewhere around age 50. I am now 43 and would much rather think about a change now than wait, and in 10 years time think 'I wish I'd done that'.
"I have been working on UK equities but it would be quite interesting to see if I could make a go of something else."
Frost is aware that the market might well draw a parallel between his decision to take a sabbatical and that of Jupiter's William Littlewood last year.
He added: "William is a brilliant individual investor with great ideas. The ideas at Deutsche for the portfolios are generated by the team."
Frost intends to use the six month break to avoid fund management altogether and said he would not consult with anyone at Deutsche, or any other group, on his future during this period.
In addition he said, were he to be unable to reach agreement with Deutsche he would sign a contract with the group stating that he would not poach any member of Deutsche's staff for 18 months. He stressed he has no intention of wanting to set up an investment boutique.
Frost said: "I want to send a significant message to the market place that I am going to do nothing to upset the stability of the team."
Frost made it clear that he preferred running retail money to institutional, as "the diverse client base makes it more interesting."
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Frost said the size of the portfolios he was running was not an issue in his decision to take a sabbatical and consider his future.
He added: "I am managing £4bn to £5bn in UK equities and there is a skill and kudos which goes with that. Most people with a small pot of money can make it do well in the short term. To do this with a bigger balance of assets is a greater challenge."
Many high-profile fund managers are keen to leave unit trust companies to set up hedge funds. Frost said: "As for hedge funds: absolutely not. I have thought about that but my experience is as a long-only manager. It is what I have specialised in for the past 20 years."
Frost began to consider his future role at Deutsche in April last year and raised the issue internally with a small group of senior staff at that time while he considered his options.
He has been with the group for 18 years.
Frost stressed that the appointment of Graham Ashby, to run the UK equity income unit trust and investment trust, was not being seen internally as a holding position until he returned. He said: "If, in six months' time, Graham is happy running the income trust, the unit holders are happy and the situation is satisfactory, I have accepted that it is Deutsche's call on what happens to the fund. Graham has produced better pension fund returns than I have during the past four or five years."
Frost added that in the past four years he felt Deutsche had created a strong team-based approach on the UK equity desk, which should ensure good performance, whoever ran the funds.
Between now and 1 April his responsibilities as head of UK equities are gradually being handed over to his successor, John Wood.
Frost took on the role of head of UK equities in January 1997, following the departure of Nicola Horlick. After four years with the challenge of the role he said he now wants to go back to running portfolios.
Frost added: "In the past couple of years, probably 30% to 35% of my time has been taken up with the investment process. This is investment but it is not about stocks.
"Relinquishing the head of UK equities role will give me more time. We have been through a period of acute volatility and the changes mean there are a greater number of different companies in the index than there were two or three years ago. In this environment you have got to make sure your competitive advantage is up to scratch and I feel my competitive advantage is not as sharp as it should be."
Frost has managed Deutsche UK Equity Income since 1989 and received praise in the recent Standard & Poor's review of the UK equity income sector for consistent long term performance.
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