Turmoil spreads north of the border

Scottish fund managers have their own upheavals to contend with, reports Magnus Grimond

There is very little feeling of Schadenfreude north of the border over the fate of Nicola Horlick, the head of Morgan Grenfell's pensions business suspended after allegations that she tried to lead a defection from the group. The Scottish fund management industry is still feeling bloodied, if mostly unbowed, in the face of its own upheavals.

Ivory & Sime, one of the pillars of the Scottish industry, is shortly expected to announce appointments to plug some of the gaping holes that have opened up since it was hit by a new wave of staff defections last week.

News of the latest departures from the Charlotte Square-based group drew groans rather than stunned surprise from its rivals, given that the uneasy relationship between Ivory and its senior employees has been a theme running through its activities for at least 20 years.

The imminent departure of Mark Tyndall, head of Ivory's UK investment department, Lindsay Whitelaw, manager of its Baronsmead investment trust, and John Todd, leader of the smaller companies team, along with his deputy Derek Stuart to set up their own "boutique" fund management operation follows a well-trodden path.

The genesis of fund managers Ivory & Company, now Stewart Ivory, in 1980 was the departure of directors from I&S, while 10 years later, five senior Ivory & Sime executives left to set up Aberforth Partners.

It is clear that the problems at Ivory & Sime have not been cured by the arrival of the wealthy Cayzer family's Caledonia Investments with what was in effect a controlling stake of just under 30 per cent in 1994.

Colin Hook, the former army officer put in as managing director by Caledonia, has been criticised for his autocratic management style.

One senior Edinburgh fund manager described him as: "A spare, ascetic, ram-rod figure: distant and rather unapproachable. He is very determined, with a clear idea of what he wants and where he is going, but not a very sympathetic figure to drag along those he wants to take with him."

His decision to remove fund managers from the board and replace them with "businessmen like himself" bruised some fragile egos and is likely to have contributed to the problems, according to this source.

But while the travails of Ivory & Sime may be largely self-inflicted, they are giving little satisfaction to the rest of the industry. Once a picture of stability when viewed against the maelstrom of scandal and defections which have rocked the City of London, the waves from the South have started to lap against the shores of Charlotte Square.

The sale of Dunedin to Edinburgh Fund Managers by the Bank of Scotland nearly a year ago was precipitated by an unprecedented wave of senior staff departures.

Then in October came the news that General Accident, with pounds 26bn under management, was moving its main investment department from Perth to London, with the loss of 30 fund management jobs in Scotland.

Hamish Buchan, the well respected investment trust analyst at NatWest Markets in Edinburgh, says these problems tend to take a higher profile in the relatively small world of the Scottish financial scene. But he concedes: "As a Scot and a board member of [the Government-backed] Scottish Financial Enterprise, I am not encouraged by all this. I am by temperament more of a bear than a bull."

Once the perception was that the industry north of the border turned in a superior performance to its London counterpart. "Since Big Bang, the image of the average Scottish fund manager being more isolated, more analytical, has gone, now that everyone works off a screen," says Mr Buchan.

Mike Balfour, joint managing director of Edinburgh Fund Managers, thinks the industry needs to sell itself more. "I think the Scots have been slow off the ground to market properly and the City of London has been some way ahead of us in that."

But he believes there are still tremendous opportunities for Scottish players as the big, integrated houses south of the border rack up problems with performance and compliance.

Such confidence is only partially shared by Colin McLean, founder of Scottish Value Management, a small fund management group which has made waves in recent years.

He sees Ivory & Sime's difficulties as just part of the declining margins and moves towards indexation or "passive management" of funds which are hitting the industry worldwide.

Many Scots fund managers would agree that these trends have had a disproportionate effect on medium-sized groups, in the pounds 2bn to pounds 10bn bracket.

Not large enough to handle the big fund mandates, where indexation is playing an increasing role, some have found it difficult to compete against the boutique groups for the more digestible actively managed portfolios.

The Scottish industry, heavily concentrated in this part of the market, looks particularly vulnerable. Mr McLean believes that as long as it retains its stability, the strength of Scotland's still mainly unquoted industry - leanly managed and nimble - will show through.

But the unstated threat nagging at many in the industry is that more bad publicity of the type it has suffered over the past 18 months could wipe out its reputation and with it that unique selling proposition which has made it so successful.

News
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Sport
sportDidier Drogba returns to Chelsea on one-year deal
News
people
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
PROMOTED VIDEO
Sport
Louis van Gaal would have been impressed with Darren Fletcher’s performance against LA Galaxy during Manchester United’s 7-0 victory
football
Voices
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Sport
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
sport
News
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
life
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Rhys Williams
commonwealth games
News
Isis fighters travel in a vehicle as they take part in a military parade along the streets of Syria's northern Raqqa province
i100
Arts and Entertainment
Southern charm: Nicolas Cage and Tye Sheridan in ‘Joe’
filmReview: Actor delivers astonishing performance in low budget drama
Life and Style
fashionLatex dresses hit the catwalk to raise awareness for HIV and Aids
Travel
travel
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

The benefits of being in Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Test Analyst - UAT - Credit Risk

£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform