New kid on the block Westbury out to provide tailored fit for private clients

Despite the dominance of giants such as UBS, Barclays and Credit Suisse, there is no shortage of newly-formed boutiques keen to fight for a slice of the UK’s thriving wealth management market.

What the new kids on the block have to offer is tailored service and in some cases, in-house research. James Goodchild, who joined Duncan Lawrie private bank in 2000, before working for a hedge fund and then chartered accountants Price Bailey, set up Westbury Private Clients in 2010, and oversees assets worth £300m (€385m) as chief investment officer.

He took the advice of a close friend and positioned himself under the umbrella of a “bigger brother” – in this case “clean and green” alternative specialist MSS Capital, which manages $3bn (€2.5bn) and has advised investors with assets of $60bn – to help cover start-up costs and receive regulatory approval, before buying out the business after two years in 2012.

Operating from the atmospheric Staples Inn, a Tudor building in the City of London that survived both the Great Fire of 1666 and the German bombing campaign in the Second World War, he is scathing of much larger rivals which charge heftily for delegating asset management to third parties.

“We work hard for our 1 per cent annual management charge because we provide in-house research and we are not allocating extensively to other funds, like some of our competitors do,” says the youthful Mr Goodchild, who recalls his pre-crisis bond-based portfolio of 2008 as one of his most successful to date.

“Some of these people charge a lot more than we do and do nothing apart from rely on others, which is somewhat foreign to our way of thinking.”

This philosophy centres on value investing and most of Mr Goodchild’s favoured, undervalued stocks are big-name, highly liquid brands, listed in the UK, Europe and the US.

Flying in the face of current fashion for an “illiquidity premium”, it is Mr Goodchild’s belief that some of the best opportunities can be found in the most easily traded stocks.

Currently he favours Germany’s Deutsche Bank, which he says is worth €60bn, but with market capitalisation of just €30bn. “Deutsche is trading at half of its book in a good market, so we can see a 300 per cent upside,” says Mr Goodchild. “We believe the business model and profitability looks good, as this is virtually the only bond trading house left in Europe. The market is sceptical of banks, with a fear of further fines and write-downs, which explains the discount, but we cannot see €30bn of fines being levied on Deutsche Bank.”

Another share that he ticks with a “like” is the UK’s Kingfisher, which owns DIY chain B&Q. “While there are problems with French and Russian operations, the UK is sound,” says Mr Goodchild, pointing out how a £1bn balance sheet debt was recently converted into a net cash position.

“There is value there, as the market has overlooked this and the cash pile is growing,” he says. “Soon Kingfisher will start to hit the radar of private equity houses, who will want to re-load it with debt.”

Typical private clients, whom he takes to lunch in “one of my clubs” are serial entrepreneurs or self-made property developers, looking for liquid alternatives to deposits, but paying a positive return. They are attracted, he says, by Westbury’s emphasis on capital preservation.

“We make it clear to clients about the strategy we are investing in and try to manage their expectations. If the equity market delivers 40 per cent, we will never be able to match that, as we are never fully allocated to equity. But we are also sufficiently diversified to avoid a perfect storm.”

These “low volatility” diversifiers include positions in commodities – including gold mining stocks as well as ETFs – plus property funds, bonds and investments in the Blue Crest fund of hedge funds.

He is also conscious of the current variety of geo-political risks which will affect market and client sentiment, including oil price shocks and instances of terrorism.

“Part of me thinks oil has come off so much as the US, and others, have, for political reasons, conspired to drive prices down. This takes away the IS cash flow, brings Russia to heel and affects Venezuela and other countries,” he says, always looking at implications of such trends on share price behaviour.

“The Paris events could lead to a political vote for the Right, with massive implications for all of Europe. But you have to invest in something. We try to look for opportunities that take the facts into account.”