BZW revamps fund managers

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The Independent Online
Barclays said yesterday it is to integrate its pounds 230bn world-wide fund management business in one new organisation run from San Francisco, making it one of the largest firms of its kind in the world.

As part of the strategy, Barclays' London fund management business is to phase out contacts with executives of the companies it invests in, and rely instead on new techniques of computerised analysis to make investment decisions on the pounds 60bn it has under management from the City.

This policy of relying on number crunching will bring it into line with the San Francisco operation, based on Wells Fargo Nikko Investments, the indexed fund manager Barclays acquired last December for pounds 282m.

Lindsay Tomlinson, who is to be joint chief executive of Barclays Global Investors, the new group, said BZW was scaling back meetings with managements because investment decisions based on hard data were more reliable.

Mr Tomlinson said it was much harder to spot the duffers among directors than 10 years ago because company managements were "either very professional or very plausible".

He added: "We don't want managers of companies coming round and just smooching us. It's a waste of time for everybody." He said PDFM already took the same view.

However, BZW will continue to use its vote on all the shares it owns and would meet managements where contentious corporate governance issues were involved. What the company did not want was the "public relations offensive of managements being trundled round by brokers".

As part of the change of style in London, 11 active fund managers, two of them directors of the operation, are to quit.

Mr Tomlinson is to be joint chief executive in London and Patricia Dunn will have the same role in San Francisco. The chairman of Barclays global investors will be Fred Grauer, also from the San Francisco end.

BGI is part of Barclays Asset Management, chaired by John Varley, who reports direct to Martin Taylor, Barclays chief executive, rather than to the group's investment bank, BZW.

Barclays is to continue offering active fund management as well as the indexed business, where the San Francisco company is the world's largest.

However, with the new techniques the difference between active and indexed fund management had become paper thin, Mr Tomlinson said.

The new advanced techniques of active fund management used data on market sentiment - such as analyst forecasts and trading patterns of other investors - as well as traditional balance sheet and cash flow valuation techniques.

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