Royal London Asset Management (RLAM)'s Martin Cholwill has upped his stake in Brewin Dolphin as he backs three wealth managers to survive the post-Retail Distribution Review (RDR) world.
Cholwill (pictured), manager of the £448m Royal London UK Equity Income fund, has upped his stake in wealth manager Brewin, buying into last week's share placing at 210p, which raised around £40m for the business.
Its share price rallied on the news of the placing, and currently trades at 238p - up 15% year-to-date.
"A lot of wealth managers have had a decent start of the year," he said. "If markets are going up, their funds under management go up, and fees they can charge on those funds goes up while costs do not.
"Brewin has a high proportion of client money in equities - probably higher than some of the other wealth managers - and so is more exposed to a rising market."
In March Brewin lost four board members, including CEO Jamie Matheson, following a reshuffle of senior staff.
The group began a strategic review of its business two years ago which has seen a raft of cost cuts and the loss of several jobs.
The firm has struggled to protect margins in the post-RDR world, with its latest results showing pre-tax profits for the six months to 31 March almost halved to £6.9m.
Cholwill has also added to his stake in Close Brothers in recent months, as well as pledging to hold on to a position in Hargreaves Lansdown.
All three stocks will continue to benefit from "survivor bias", he said, as smaller IFA businesses wind up post-RDR.
"A lot of people have dropped of the market: people of a certain age who do not fancy doing professional exams, and IFAs who have made their money.
"People were worried about Hargreaves Lansdown in the autumn of last year, but what the market missed was that initially RDR was actually going to be a positive for them."
Cholwill, who bought his Hargreaves stake at the initial public offer price of 160p, said the stock, which touched £10 for the first time this month, still has further to rise.
"Shares may have paused for breath, but on a longer-term view it is the sort of company you want to be involved with," he said.
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Reporting to Steve Hill
Appointed on 19 September