Ben Whitmore starts building new fund, but will they come?

Veteran fund manager Ben Whitmore launched the debut fund at his new shop, Brickwood Asset Management, yesterday.

The fund is called Brickwood UK Value and will be managed by Whitmore along with Kevin Murphy, who left Schroders to join the venture.

But demand for actively managed UK equities is weak, and unease around the merits of investing in boutiques means Whitmore may face greater challenges than simply taking a ‘build it and they will come’ approach.

The investment management space is littered with the graves of boutique fund houses who had relatively short lifespans such as Sanditon, Crux and Tellworth.

Ben Yearsley, investment director at Fairview Consulting, said: “I am certainly not against investing in boutiques, but the hurdle is higher than for investing in other funds. There are more questions to ask around governance, who is the fund manager’s boss, for example? But we do own some.

“With regard to Whitmore, we owned the funds he ran at Jupiter, but see no reason to switch out of them now, because in Adrian Gosden and Alex Savvides, they have found excellent replacements. There is also a question around whether the manager will have the same level of resource at their new firm as they did previously, though the counter to that is, they may have more time to focus on the stocks at a boutique with less bureaucracy.”

Darius McDermott, investment adviser to the VT Chelsea range of multi-manager funds said he owned Whitmore’s UK fund when the manager was at Jupiter, “and was on the point of buying the global fund.”

But he said: “There are definitely more questions to ask of a boutique, mostly around governance. We are reassured that Ben Whitmore has Kevin and Dermot Murphy with him, so he isn’t a one-man band.” 

Peter Dalgleish, chief investment officer at Parmenion, said: “Capital allocation doesn’t tend to vary between boutique and non-boutique. The more critical element determining capital allocation is based on the risks associated with a particular asset class/sub asset class or investment style that the fund is aiming to deliver, to ensure consistency of attractive risk adjusted returns for clients over time.”

But perhaps the most crucial fact to know about Whitmore’s new boutique relates to his old fund: since his departure the Jupiter UK Dynamic Equity fund (the new name for Jupiter Special Situations) has shrunk from more than £2bn in size to less than £1bn.

Key man (or woman) risk is real and allocators are attuned to it, particularly after the past year.

The biggest challenge Whitmore faces may be to convince fund buyers that his new fund shop isn’t a solar system where he is the sun and everything orbits around him.