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The hypothesis that no one individual is bigger than the team will be destruction-tested by the departure of Neil Woodford from Invesco Perpetual. He plans to set up a fund management company of his own. Up to £25bn of the £33bn he runs at Invesco Perpetual could follow him out the door, according to Mark Dampier of Hargreaves Lansdown.
Mr Woodford reputedly once attempted a buyout of the UK-based, US-owned fund manager with which he is synonymous. But setting up in competition looks like a cheaper alternative. Moreover, Mark Barnett, who will take over Mr Woodford’s two flagship income funds, could be forced to meet the bulk of redemptions by selling blue-chips. That would leave him with an over-large helping of the illiquid stocks in which his mentor dabbled.
The cult of the equity may have faltered lately. But the cult of the star equity investor is in rude health, thanks partly to Mr Woodford, whose two main funds have more than doubled in value in 10 years.
Investment companies have only themselves to blame if the departure of a top manager damages their business. They have found it easier to market a fund on the personality and record of these rock stars than the fusty detail of stockpicking. The pitfalls were apparent in the failure of Fidelity’s Anthony Bolton to work the same magic in Chinese investment he had demonstrated in UK special situations.
Yet the link is a natural one to make. Even team-conscious Schroders saw more than £1bn drain away when UK equities specialist Richard Buxton jumped ship.
Conflicts of interest between agent and owner are eliminated when they are the same person. That would be to the advantage of Mr Woodford’s start-up, in which the bluff founder would presumably have a large stake. So would its likely long-termism, contempt for closet indexation and willingness to forestall such corporate follies as the BAE Systems/EADS merger. Can’t wait.
Burberry: equestrian fright
Forever plaid? Not Angela Ahrendts. The mastermind of Burberry’s elevation to the ranks of international fashion brands is stepping down. And, as you would expect, she is doing so stylishly. She is headed for Apple, taking on a retail role that looks like a fancy version of the job ex-Dixons boss John Browett failed to hang on to.
The City doffed its cap with a 3 per cent dip in the shares. Investors in the group, whose gear bears the historic equestrian knight emblem, have enjoyed a fabulous ride since she took over in 2006. Total shareholder return is 354 per cent, seven times ahead of the FTSE 100.
The resurrection of the moribund brand in the noughties should be credited to predecessor Rose Marie Bravo. Ms Ahrendts’ achievement was to push Burberry upmarket and into more posh shopping malls. When she joined, investors still measured Burberry against UK high street fashion business Next. Knock-offs of its red and brown check were shamingly worn by the undeserving poor. No longer.
A Burberry profits warning last year reminded us that the Indiana-born executive was fallible. Otherwise she has remained remarkably sure footed, buying out Asian licensees to raise margins and launching a promising beauty business.
The anointment of design boss Christopher Bailey, a long-time Ahrendts ally, gives shareholders much to ponder. Many would have preferred Stacey Cartwright, the finance director whose departure we may now attribute to coming second in a succession contest for a second time. Mr Bailey is less familiar. His decision to hang on to the design brief prompts worries he may be overstretched.
Ms Bravo was popular in the rag trade, less so in the City. Although fashionably late for presentations, Ms Ahrendts kept both constituencies purring. Mr Bailey will have his work cut out to do the same.
The pressures on him have been extraordinary. He led the Financial Services Authority during the post-Lehman meltdown and has been criticised for failing to see it coming. But workplace stress is stunningly ordinary. One FTSE 100 chief executive distinguishes between “linear and non-linear” stresses. The first are positive, helping you to execute plans. The second are unexpected and dangerous strains triggered by crises, he says. Mr Sants has been heavily exposed to these.
The illness of the ex-investment banker – from which one hopes he will swiftly recover – has one small positive. Having been made public, it will help erode the culture of silence about a problem afflicting so many of us.
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