Ambitious Berry determined to become pick of the bunch

After two years at the helm of Berry Asset Management, its combative and ambitious CEO Jamie MacLeod is keen to prove he can once again build up a boutique into a mainstream business.

He has done it before with UK fund house start-ups at Scottish Widows, Investec and Skandia. But this time is different for the much-travelled, often controversial investment boss. He has acquired a 20 per cent stake in Berry from owners Swiss bank Bordier & Cie, which will catapult him firmly into the market’s European wealth management homelands.

“I don’t want to start a business where I have to turn on the lights, arrange the lease and buy the furniture,” says Mr MacLeod, whose first aim is to push his £700m (€867) in client assets across the £1bn barrier, with an eventual £2bn target deploying existing resources. “If you can do things right in a boutique, the opportunity for growth is certainly there.”

Those who know Mr MacLeod well say the margin-driven Scotsman, who made a small fortune at the helm of the Skandia funds franchise, is keen to show critics he can prosper as an entrepreneur and make a name for himself in the more upmarket wealth space.

His challenge is to construct bespoke portfolios for rich clients, across a wide range of asset classes, in an increasingly uncertain environment, while leaving traditional banking and custody or “cold storage services” to his Swiss parent group.

His growing client-base of intermediaries such as lawyers, accountants and independent advisers is attracted to a group who are shunning opaque commission-led structures, in line with encroaching regulations in the UK and elsewhere, in favour of a straight annual fee of around 1 per cent to manage assets.

Mr MacLeod has also outsourced administration to SEI, the US specialist, which has made a name in providing back office, technology-led services to private banks and wealth managers. But he says service rather than cost considerations provided the key to this decision.

“Outsourcing is a tricky process and an expensive business,” claims Mr MacLeod. “But the costs go up for us, not the client. We think that providing world-class administration and client service gives us a competitive edge. When you are looking after rich people, not only do you need to get the investment returns right, but also the client relationship. If you have wonderful returns but a duff relationship, you can lose the client.”

He sees the wealth management segment as miles away culturally from the product distribution arena, which he once bestrode. “It’s all about the level of bespoking on investment reports and their delivery,” which must be matched exactly to a client’s requirements. “You can’t just have a machine spewing things out. It is very different from the funds world.”

Although he may not be the biggest fan of the Retail Distribution Review-led legislation about to transform delivery of financial services in the UK and being closely watched by the rest of Europe, the opportunities it provides are clearly one of the main reasons the sport-loving Mr MacLeod, himself son of a professional footballer, has come back into the game.

“There is a big opportunity here for private banks and wealth managers to start running more money,” he says. “With the extra costs, qualifications and regulatory requirements, it will be a big ask for independent advisers to continue to position themselves as investment experts. Many of them will outsource asset allocation to people like us.”

Indeed, booming allocations across the wealth management world are being driven primarily by costs considerations, says Mr MacLeod, with 35 per cent of balanced portfolios now lodged in passive instruments, up 10 per cent from positions 12 months ago.

US weightings have gradually been beefed up at the expense of Europe, to 17 per cent in some more adventurous strategies, although there is a bias here towards defensive stocks providing a steady income stream.

But key to Berry’s investment thinking is a current 12 per cent asset allocation call in favour of emerging and South East Asian markets, although in this sector Mr MacLeod’s team buys portfolios of selected funds, rather than taking the risk of selecting individual stocks.

“If a client wants diversification into fast-growth markets, 5 per cent just doesn’t cut it,” he says. “We will buy them five funds with 30 stocks each and then monitor the fund managers to make sure they are not all buying the same shares, so that there are at least 100 stocks in the portfolio.” It is this type of approach which Mr MacLeod, already a big name in the fund distribution game, hopes will win him a new set of supporters.

Jamie MacLeod, Berry Asset Management