WEALTH WATCH
STEPHEN CRANSTON: Old Mutual paid a lot in school fees for swing from centralised model to boutiques
In the search for market-beating returns, fund managers working together as an orchestra will always win the mandate over a solo pianist
Like many other businesses, asset management goes through phases of centralisation and decentralisation. In 1997 Bryan Hopkins left his job as an accounting professor at the University of Cape Town to become chief investment officer of Old Mutual Asset Managers (OMAM) with this brief: to ensure that all clients in their respective products, predominantly its balanced fund in those days, had the same outcome. Before that, in what we might now call the boutique model, there was a different outcome if you happened to be assigned to Arnold Shapiro than if you were assigned to, say, Charles de Kock. Before the centralised model was introduced, OMAM fund managers were free to ignore analysts’ share recommendations and didn’t worry too much about attendance at meetings. For a while in this attempt to build consistency, there was a significant shift of power to the analysts. Sanlam went through a similar process. Hopkins’s great hero was Peter Lynch of the Fidelity Magellan Fund and a geniu...
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