Quilter Investors’ CIO Marcus Brookes will take over running the firm’s Cirilium portfolios alongside existing portfolio manager CJ Cowan, Portfolio Adviser has learned.
Former co-managers of the fund-of-funds range, Sacha Chorley and Ian Jensen-Humphreys, have departed the business following a prolonged period of underperformance from its ‘Active’ range.
The change comes following the firm’s Assessment of Value report published in July this year, which flagged four out of five of its actively-managed funds – Cirilium Conservative, Balanced, Moderate and Dynamic – as underperforming their sector averages and benchmarks over five years.
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There are 15 Cirilium funds in total, running approximately £12bn in assets under management between them. These are spread across three ranges, Active, Blend and Passive.
While the five Passive funds achieved green flags across all seven of the AoV’s assessment pillars, Blend funds received three amber flags, while four out of five Active funds were red flagged.
Quilter Investors’ Brookes (pictured), said: “We have seen really strong flows into our Passive range and good performance. We have seen a decent performance in our Blend range, and reasonable flows into that. But we have been quite weak in our Active range.
“So, with the Assessment of Value having been brought in by the FCA and the consumer duty implications which go with it, we had to decide on actions that we were going to take to find a path to green for the Cirilium Active range.”
The CIO said the firm’s Passive range, which uses purely strategic asset allocation, had performed well. But that the “more investment activity that became involved, the less well the portfolios had performed”.
“Our market-leading MPS, WealthSelect, has 56 portfolios in it, and is run by a team of three separately to the Cirilium range – but they use the same process which the team at Cirilium uses,” he explained.
“All of our resources have been applied to both teams, and one team has produced incredibly strong returns and, as a result, we’ve seen good business flows. Yet, using the same resources, we’ve had less good results across the Cirilium range, primarily in Active.“
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Brookes added: “We decided on enhanced oversight but, we felt that the time was right to make a change in terms of team.
“We would like to thank Sacha and Ian for their contributions over the years and wish them well in the future.
“So, I’m taking over all of their responsibilities with one of the existing fund managers on that range. CJ Cowan will join me in running that, but also in creating a portfolio management group which leverages off of the entire investment process.”
Portfolio Management Committee
As a result of the personnel changes, Quilter has created a portfolio management committee, bringing together senior investment professionals from across the business, in order to more closely align Cirilium’s performance with WealthSelect’s success over the long term.
“It will include members of the WealthSelect team, the head of managing research, the head of investment risk and, between us all, we’re going to be managing around £13bn,” Brookes said.
“Importantly, we’re going to align the investment process with the funds slightly more closely than it has been.”
Initially, the committee will be for the firm’s fund-of-funds business only.
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“I do think that, given my other roles and how important it is to get Cirilium back on track, getting lots of people’s opinions on creating really strong risk-adjusted returns over the medium-to long-term is important. It’s also good governance,” Brookes said.
“That doesn’t mean trading every day. It means making sure cash flows are invested properly. But I expect us to have a very solid model portfolio which, when we implement it, will give our customers really good returns in the manner that they expect.”
In the meantime, Quilter has commenced hiring for a new permanent portfolio management team for the range.
“It is very early days. The first thing we have to achieve is getting the portfolio management committee working, so that we can have an interim arrangement which we’re all comfortable with,” the CIO explained.
“This allows us to take the time to find the right team for our customers’ assets. We have a very particular investment process which we all believe in, so we need to find the right people who fit us from an investment culture point of view, but also the more generally.”
