Cazenove joins up with Rosenberg

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The Independent Online
Cazenove, the blue-blooded London stockbroker, is to form a new company with California-based Barr Rosenberg European Management to develop a global smaller companies index covering the mature markets of North America, Europe and the Pacific.

The intriguing venture, which is likely to lead to the launch of new investment trust in Britain, brings together two most unlikely partners. While Cazenove is famous for its slow-moving British stuffiness, Barr Rosenberg is a soft-spoken moustachioed Californian academic whose expertise in econometrics and computers has brought him a large following in the investment community.

After a successful career at Berkeley University, where he rose to become professor of economics, Mr Rosenberg found his understanding of markets could help him identify undervalued companies using what is called active-quantitive management.

He bought the most expensive electronic brains available and loaded them with as much detail about American companies he could find.

Manned by only a couple of dozen employees, his black boxes churned out lists of undervalued stocks from the lists of under-researched companies in America.

The results made him famous as he regularly out-performed the indexes.

But the 1990s have not been kind to his investments and his computers underperformed by 4 per cent for two years running because they failed to anticipate the flight of irrational investors towards blue-chip stocks during a recession.