PRESSURE is piling up on Scottish Widows Investment Partnership chief executive Dean Buckley ahead of a key strategy review as it continues to suffer defections of key staff and investor criticism of its performance.
SWIP, owned by Lloyds Banking Group, has this month lost two senior managers, including Robert Waugh, head of UK equities, who has moved to Royal Bank of Scotland. Graham Wood, the chief investment officer for equities left at the beginning of the
month following a management team reshuffle.
Last month, its fixed income team, headed by Rod Davidson, deserted SWIP to go to Dundee-based Alliance Trust.
The churn of SWIP personnel comes weeks before Buckley is due to reveal a new corporate strategy following the sale of the third-party business of its partner firm, Insight Investment Management to Bank of New York Mellon for £235 million. Although more than £40 billion in funds were switched to SWIP after the sale, it was widely thought Insight's managing director, Abdallah Nauphal, would take over the head of Lloyds' merged asset management business.
Investment bosses have begun questioning SWIP's performance in the market. Darius McDermott, managing director of IFA Chelsea Financial Services, said the loss of key teams and consistent underperformance means he does not invest client money in SWIP funds. In Chelsea's recent survey of three-year performance of investment funds, SWIP had the greatest number in the "relegation zone" measure of under performers.
"We don't look at SWIP for anything," said McDermott. "What we are looking for is investment excellence in areas our clients are interested in and there hasn't been a huge amount of interest in SWIP for years."
Mark Dampier, at Hargreaves Lansdown. attributed the high turnover rate to typical market demand for high performing teams. "If they are any good, fund managers just get poached," he said. However, he said that although SWIP was still attracting investment funds, this was not due to the performance of its fund managers so much as its sales network in Lloyds branches. "Despite poor performance, it is amazing how much sticks in poor funds."
"I have no idea who is buying SWIP. I guess a lot of it is through branches, where investment performance is not of great concern." He added that SWIP funds "just don't hit the radar".
In early September, SWIP announced a reshuffle of its management team after the departure of Wood.
McDermott said the group could improve its standing in investment fund rankings, but only if it recruits top managers to replace those who are gone.
He added that SWIP may find recruitment a challenge if it is constrained by government crackdown on big bonuses.
"In this climate, with all this no bonus for bankers stuff, recruiting is a not so easy to do especially for a partly-government owned organisation. If they want to replace Waugh with a high-profile UK fund manager, you have to get your chequebook out. If they are not in a position to do that, they are in trouble."
A SWIP spokeswoman said: "On 2 September, Dean Buckley announced the executive team that will drive SWIP forward and establish its reputation as a market-leading asset manager with unrivalled internal business distribution and innovative external franchise.
"Over the coming weeks SWIP will be in a position to provide further information regarding its business strategy. However, our ultimate aim remains to deliver strong investment performance, innovation, efficiency and world-class service."
