R&M looks to add fund managers and further distribution hires as CEO Barham outlines five-year plan

Source: Investment Week David Brenchley 2020-08-07

River & Mercantile CEO James Barham

New product launches expected in next six to nine months.

River & Mercantile CEO James Barham expects the asset manager to launch a number of “interesting products” in the next six to nine months as it continues to build out its presence in the UK funds market.

R&M already has a suite of European equity funds on the way, having poached James Sym from Schroders to work within its multi-factor PVT team.

And at the asset manager's recent trading update, the CEO told investors he was looking to bring in a global quality/growth equity team to complement PVT, as well as an alternative credit team.

Barham told Investment Week the firm would continue to invest in Hugh Sergeant's "market-leading" PVT team, with Sym having started in his role on 1 August. But, he added, "we also want to be able to develop other strategies that are complementary to what we currently manage".

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Speaking from the company's London offices, which have been re-opened for those who wish to return, Barham continued: "From an equity perspective, I was very keen to bring in a quality growth team that is not in competition to what we are doing within the PVT team.

"When we go to see our clients, we want to be able to offer them a range of strategies to meet their various needs. It is very rare you will find an intermediary that just wants to buy value or just wants to buy quality; they will look to blend their portfolios to create some diversification.

"We have been looking for some time [for a quality growth team] and were reasonably far down the route with a couple of managers. One of the great advantages we have is a manager research capability that allows us to understand who is in the market who we particularly rate.

"We have some very clear ideas in terms of the sort of manager we want and the factors they look at. What was interesting is that being open in our trading statement has actually thrown up some interesting names."

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The credit team was a more broad focus, Barham continued: "If I look at the needs of our clients, having an alternative credit capability looking at a whole range of different things from CLOs to private debt is an area we would like to develop.

"We have had a number of conversations with teams, but it is an area we would like to develop over time; we don't have that many active conversations in that area ongoing at the moment."

Barham also referenced the firm's liquid alternatives capabilities when speaking about looking to take the innovation R&M had shown since he co-founded the company in 2006 "and ensuring we can put that into the right product form so that we can mass customise it across all of our client bases, whether than be UK wholesale, UK institutional, US wholesale or Australian institutional".

Distribution push

The move to add to R&M's fund range will be complemented by the building out of its distribution capabilities, in both the UK and Australia. One of Barham's first actions when taking over as CEO in July 2019 was to appoint Pioneer Investments' David Hanratty as global head of distribution.

Latterly, the firm has snapped up Merian Global Investors' Simon Smith and Martin Canavan, who will join as head of wholesale UK distribution and regional sales director respectively.

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Barham explained he had "a very clear plan of what I want the business to look like and where I want the business to go over the next three to five years". That plan took three pillars: a significant investment in distribution, increased investment in R&M's investment manufacturing capabilities, and consolidation of its operations platform.

Barham said Pioneer had been "very successful at raising assets, and a lot of that was down to [Hanratty] and his team".

"I was absolutely delighted that David agreed to join the business this time last year.

"We have worked very closely together over the last 12 months in terms of developing our plan around how we were going to reinvigorate our distribution capabilities. There is no part of the distribution function which will be immune from that."

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Alongside Smith, who helped take Merian's wholesale assets from around £4bn to £16bn, and Canavan, the firm has added to its marketing team and created a head of fiduciary and advisory sales in Ronan O'Riordan from Russell Investments, who is a "very highly regarded individual in that space".

"They will not be the last [hires]. Certainly in terms of our objectives and where we want to get to, I would not be surprised to see that team grow from where it is today to over eight people.

"The wholesale part of our business is a key part of our business plan over the next three to five years and it is absolutely critical that we have the right people with the right capabilities operating in that market.

"The market has moved on from a purely relationship-based sales approach. You need to have the technical abilities to be able to talk to an increasingly sophisticated market about a whole range of complex investment strategies."

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Barham also committed to strengthening R&M's presence in the UK institutional market, as well as its main overseas territories of Australia and the US.

Value assessment

Elsewhere, R&M produced its assessment of value at the end of March, with Barham noting there were "no red flags".

The firm did, however, reduce the minimum initial investment, of £2.5m, and minimum subsequent investment limits on the cheaper ‘B' share class of all eight of its UK-domiciled funds to bring them in line with the ‘A' share class.

Further, it contacted investors in the ‘A' share class of its UK Equity High Alpha, UK Equity Smaller Companies, UK Dynamic Equity, UK Recovery and UK Equity Income funds to inform them of the changes and to explain how they can convert their investments from the legacy ‘A' class into the cheaper ‘B' shares.

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Barham said the value assessment was "really important", noting that "as an industry we have been pretty poor at stepping back, looking at strategies and actually saying ‘hang on, is that providing good value to clients?'".

"I think we must as an industry get much better at being decisive and saying ‘listen, the market has changed, the client need has moved on, this is now no longer meeting client needs and we should shut it down'."

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R&M looks to add fund managers and further distribution hires as CEO Barham outlines five-year plan

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