Cazenove poaches star fund managers from HSBC

Thousands of pounds of retail investors' money could disappear from HSBC's asset management division after the bank revealed yesterday that five of its flagship fund managers have jumped ship to run investment funds at Cazenove.

The departure of HSBC's star managers – Tim Russell, head of UK equities, and Chris Rice, head of European equities – alongside that of Julie Dean, Wade Pollard and Steve Cordell, almost wipes out HSBC's UK and European unit trust desk. Together they run more than £2bn of retail funds. They will be joining two former senior HSBC employees in the asset management division of Cazenove – its managing director Robin Minter-Kemp and chief executive Andrew Ross.

Investment advisers say the sudden mass departures leave HSBC's asset management arm high and dry, and expect many investors to move their money to Cazenove funds.

Tim Russell, who manages more than £1bn in the AAA-rated UK Growth & Income fund and the UK Income fund, has been expected to leave HSBC for some months. His funds are widely regarded as a core holding in most retail investor's portfolios. "This is a big blow for HSBC – both Mr Russell and Mr Rice have very good reputations. A lot of money is going to follow them to Cazenove," Ben Yearsley, investment manager at independent financial adviser Hargreaves Lansdown, said.

Jason Hollands, at the financial advisers BestInvest, has put all the HSBC funds on hold, until he establishes the credentials of the new managers. "This is a disaster for HSBC. This wasn't simply a case of them being offered a better monetary deal elsewhere. This implies there are issues within the group. HSBC has been losing a lot of staff from its investment trust team, private client division and sales. This is deeply embarrassing for them and leaves them in a sticky position," Mr Hollands said.

HSBC will draw on existing staff to run its UK and European funds. Bob Morris, manager of HSBC's Household Names fund, will take the helm of the UK funds and Philippe Alter, who is based in Paris, will become chief investment officer of all pan-European funds.

"We are obviously disappointed about the news – but it is the nature of our business that people do move around. Our investment process emphasises team work and our existing managers have an excellent track record," a spokesman for HSBC said.

He declined to comment on whether HSBC would now look to increase its 51 per cent share of the fund manager Framlington. This could be used as a means of recovering the damage done to the HSBC business in losing its top managers.

Cazenove Asset Management currently manages about £8bn of assets and is expecting more to come on board. Until now it has focused on managing money for private clients, institutional investors and charities. With HSBC's team in place it is looking to gain a stranglehold on the retail investment market.

Mr Russell will not join Cazenove until January. His colleagues will start from the beginning of December.