Julie Dean has been one of the best performing UK managers over the longer term, having almost doubled the returns of her peer group composite since the turn of the millennium.
Performance of manager vs composite since 2000
Source: FE Analytics
The star manager began her investment career at GT Asset Management in 1992 as a UK equity fund manager and she moved to HSBC six years later to manage HSBC UK Growth and HSBC British.
Her popularity increased when she joined Cazenove in 2002 though where she took the helm of Cazenove (now Schroder) UK Opportunities and utilised the “business cycle” approach, which involves choosing stocks based on how the cycle impacts earnings growth and market valuations.
According to FE Analytics, the fund achieved a top-decile total return over her tenure, having gained 313.71 per cent and outperforming its peer average by 133.63 percentage points.
Performance of fund vs sector and benchmark under Dean
Source: FE Analytics
In fact, the manager (pictured) was appointed head of the business cycle team at Schroders from July 2013 following the company’s acquisition of Cazenove Capital Management and, for the rest of the year, she continued her streak of sector-beating returns on an annualised basis. 
While the fund mostly remained in the top quartile over her tenure though, including during the financial crisis of 2008, it fell to the bottom decile in 2014 and Dean announced her shock exit from the firm in September that year.
The abrupt turnaround in fortune led many investors and industry professionals to question what had impacted Schroder UK Opportunities so negatively, and one potential reason given was the fund’s hefty £2.5bn AUM and the large amount of inflows it was taking.
However, in an article published shortly before Dean’s departure from Schroders, the star manager told FE Trustnet that the fund’s underperformance was a result of stock-specific disappointments and an even weighting across the market cap spectrum rather than its size.
“While there were a few stock specific issues, the biggest story – which we have realised with the benefit of hindsight – is that we should have used more of our cash flows to tilt the portfolio more towards mega-caps,” she said in June 2014.
“We ran a far more balanced portfolio and while we had started to implement that directional change candidly at the back end of last year; our error was that we didn’t move more quickly.” Less than a year after her departure from Schroders, it was announced that Dean would launch a fund as part of the team at Sanditon Asset Management – TM Sanditon UK.
Despite her previous fund’s lacklustre performance shortly before her departure, many investors became excited at the prospect of the manager moving to a smaller boutique firm and joining former colleagues Chris Rice and Tim Russell at the company, whom she worked with closely during her time at Cazenove.
“Many fund managers fail to reproduce previously strong performance when moving companies, much the same way as many footballers play well for one club and then don’t match that form when they’re transferred to another,” Chase de Vere’s Patrick Connolly told FE Trustnet last year.
“We have recommended Julie Dean to clients previously and she’ll be using an identical investment approach at Sanditon as she did at Cazenove and Schroders and so has every opportunity to do well."
However, since the fund’s launch in June 2015 this hasn’t seemed to be the case, as it has lost a total of 11.35 per cent compared to its peer average’s loss of 5.85 per cent and its FTSE All Share benchmark’s loss of 6.03 per cent.
Performance of fund vs sector and benchmark since launch
Source: FE Analytics
This may come as a surprise to investors, given Dean’s historical bias towards mid-caps (which have enjoyed a good run) and the fact she was starting with a clean slate and no legacy holdings.
Were investors too optimistic that Dean’s performance would return to its former glory? BRI Wealth Management’s Dan Boardman-Weston says that the firm has been supportive of the manager since her days at Cazenove and remains pleased with its management selection.
“The business cycle approach that has been developed and employed by Dean over the last 20 years has delivered solid outperformance for investors. By being flexible in its approach to stock selection, it should not leave investors as exposed to the ebbs and flows of the stock market as a result of the business cycle,” he explained.
“Even though the fund has underperformed the sector since its launch, this is a very small time-scale in terms of investing. Investing being a long game, managers need sufficient time for their ideas and themes to come to fruition. Sticking with Dean over the longer term has led investors to achieve nearly double the returns of the peer group and we would be paying less attention to the short term underperformance.”
Hargreaves Lansdown’s Heather Ferguson agrees, and adds that UK market conditions are also likely to have hindered the fund’s performance.
“June 2015 was an unfortunate time to launch the TM Sanditon UK Fund as the FTSE All Share has struggled since,” she pointed out.
“Few funds investing in the UK have been immune, but Sandition has been particularly hurt by the poor performance of a number of commodity-related companies. That said, Julie Dean has a long track record of success and a difficult six months does little to shake my confidence in her ability to outperform.”
A counter argument could be that manager Matt Hudson, who has since taken the helm of Schroder UK Opportunities and follows a very similar investment process to Dean having worked at Cazenove and Schroders, has managed to outperform the fund since its launch by 249 basis points.
Performance of funds vs sector and benchmark since Sanditon TM UK launch
Source: FE Analytics
That being said, both have underperformed relative to sector and index.
“It’s probably unfair to compare [Dean’s] short-term performance with that of her former colleague Matt Hudson, who stepped into the management of an established portfolio, systems and support. Hudson also has twice as long managing his UK Opportunities fund than Dean has at the helm of Sanditon UK, as a result of her garden leave,” Informed Choice’s Martin Bamford said.
“Add to this the difficult conditions for UK equities over the past year and it is unsurprising that some disappointing three and six-month performance figures are evident. Investors and advisers who celebrated Julie’s management style at Schroders will be prepared to give her time to deliver outperformance.”
The managing director and wealth manager added that the fund uses a rolling three-year period for its benchmark, and the FTSE All Share rather than the IA UK All Companies sector average, so it is not yet possible to make a fair assessment of the fund’s comparative performance.
TM Sanditon UK has a clean ongoing charges figure of 0.87 per cent.
