Stoakley (pictured) has admitted in the past that Schroders’ retail multi-asset team was an area of weakness, but believes this is soon to change following today’s announcement. "We identified several key strengths at Cazenove. We believe the two firms combined will form the leading private banking and wealth management business in the UK," he said.
"The acquisition also brings in a number of highly talented individuals. Broadly I don’t think there are any weaknesses across the range, but the UK equities team of Julie Dean, Paul Marriage, Matthew Hudson and company is very strong, as is Chris Rice’s European team."
"I’d also say we’re getting access to a phenomenal multi-manager team. We didn’t have competition in the intermediary space in this area, but in my opinion this gives us a market-leading, world class team."
Brookes and McDonald run seven funds at Cazenove, with combined assets under management of £1.58bn. All are funds of funds.
Five of the seven are multi-asset portfolios, while two – Cazenove Multi Manager Global ex UK and Cazenove Multi Manager UK Growth – have a pure equity focus.
Overall the range’s track record is strong. With the exception of the UK Growth portfolio, all of the funds with a long enough track record have beaten their sector average over one, three, five and 10 years.
Performance of funds vs sectors over 10-yrs
| Name | 1yr (%) | 3yr (%) | 5yr (%) | 10yr (%) |
|---|---|---|---|---|
| Cazenove Multi Manager Global ex UK | 20.69 | 35.32 | 57.21 | 154.04 |
| IMA Global | 12.91 | 20.89 | 36.89 | 131.13 |
| Cazenove Multi Manager Diversity Tactical | 15.72 | 28.72 | 39.75 | 149.25 |
| Cazenove Diversity Income | 11.92 | N/A | N/A | N/A |
| IMA Flexible Investment | 11.14 | 19.11 | 27.97 | 124.78 |
| Cazenove Managed Portfolio | 14.52 | 26.28 | N/A | N/A |
| IMA Mixed Investment 40%-85% | 11.67 | 20.5 | 30.91 | 115.03 |
| Cazenove Multi Manager Diversity | 9.55 | 20.8 | 33.76 | N/A |
| IMA Mixed Investment 20%-60% | 9.55 | 17.57 | 26.07 | 84.21 |
| IMA UK All Companies | 16.22 | 32.87 | 40.84 | 151.16 |
| Cazenove Multi Manager UK Growth | 17.28 | 35.35 | 39.5 | 156.58 |
Source: FE Analytics
Cazenove Multi Manager Diversity Balanced is the only one of the seven that is yet to achieve a one year track record.
More often than not, the funds are top quartile in their respective sectors over these periods.
Cazenove Multi Manager Diversity is by far the largest of the seven funds, with AUM currently standing at £1bn.
It is not the standout performer though, having achieved only second quartile returns over three and five years. The fund has been significantly less volatile than its IMA Mixed Investment 20%-60% Shares sector average, though.
On a relative basis, the Cazenove Multi Manager Diversity Tactical and Global ex UK funds have been the standout performers. They are both top quartile in their sector over one, three and five years, and second quartile over 10.
Performance of funds vs sector over 5yrs
Source: FE Analytics
Once the acquisition is approved by shareholders and regulators, Stoakley says he expects to see some funds merging over the coming months.
However, he says Cazenove managers will be able to exercise their own styles independently from any house view.
"From what I hear, the Cazenove managers are very happy [with the plans]," he said. "Across the entire range, I’d expect to see some funds merging, but we haven’t finalised anything yet."
"We are keen to take our time to make sure there is no disruption for existing investors."
"Here at Schroders, we don’t dictate any house view. There is a very broad range of styles, and so we think the likes of Julie Dean and Paul Marriage will be able to join teams with Andy Brough and Nick Kirrage very easily."
"If you look at the UK range, we have funds with a small cap, mid cap, specialist Alpha, income, value and core style. The funds coming in will be able to operate with their own approaches and styles," he added.
A spokesperson for Cazenove confirmed that their funds will be run in the same way: "It is the intention that the current fund range and fund manager responsibilities will move over to Schroders with no change to the investment process."
"It is also intended that there will be no change to the investment objectives or performance targets, ensuring minimal impact to clients."
It has been a hectic week for Schroders, with Richard Buxton’s departure to Old Mutual coming just a matter of days before the Cazenove acquisition.
Stoakley was keen to point out that Schroders has been in discussions with Cazenove for many months.
"This is no knee-jerk reaction [to Buxton’s departure]," he said. "This is a complete coincidence."
Many are tipping FE Alpha Manager Julie Dean to take over Buxton’s UK Alpha Plus fund, but Stoakley says nothing has been confirmed just yet.
"You’ll be hearing something in the next few weeks," he added.
Industry experts have reacted to news of the merger with cautious optimism.
Hargreaves Lansdown’s Adrian Lowcock said: "We do not expect Cazenove’s asset management division to be significantly affected by the merger in the early days."
"We would expect any initial cost-cutting and consolidation to be made in distribution and administration areas but not in the fund range of the two groups."
"Given the merger is unlikely to have much initial impact on the asset management business, we have decided to retain both Cazenove European and Cazenove UK Smaller Companies funds on the Wealth 150. However, we will continue to monitor the situation going forward."
Lowcock’s colleague Laith Khalaf added: "It’s definitely something we’ll be keeping an eye on. It’s very early days – the consolidation of the funds is something that will happen a lot further down the line."
"The issue of who’s going to be in charge is a potential stumbling block, as there is a great deal of overlap between the groups."
"That said, combining two management teams can be looked upon as a big positive, as it’s always good to look at something from a different perspective."
Managing director of Chelsea Financial Darius McDermott also pinpoints Cazenove’s multi-manager team as a major positive for Schroders and expects it to take the reins of this part of the business.
"One area where there will be immediate integration is in the multi-manager space where the Cazenove team will move into the Schroder portfolio solutions team," he said.
"The Cazenove managers will still run the Cazenove fund, however."
McDermott says he is sticking with the Cazenove funds on Chelsea’s recommended list, but that he is not expecting Dean to take over Schroder UK Alpha Plus.
"The most important consideration with these big corporate changes is the fund managers who are running our clients' money," said McDermott.
"Our main concern is that the fund managers on our buy-list – Julie Dean, Paul Marriage and John Warren – are happy with the transition and we've been assured by both companies that this is the case."
"We've been told that the fund manager responsibilities for these funds will move over to Schroders with no change to the investment process, objectives or performance targets."
"We are therefore happy to maintain our 'buy' ratings for Cazenove UK Smaller Companies and UK Opportunities funds."
"We've also been told that the European team will not be integrated with the Schroders European team at this point."
"Will Julie Dean take on Schroder UK Alpha Plus when Richard Buxton leaves? I don't think so. Julie manages money in a very different way so the remit of the fund would have to change significantly," he finished.