Schroders is the Savile Row suit of investment: understated, expensive and very British. It is a piquant choice to run Woodford Patient Capital, a struggling investment trust. This symbolises the discredited cult of personality of Neil Woodford. Star fund managers are as frowned on at Schroders as brown, tasselled loafers.
It is easy to see how these City pin-ups are created. Charismatic stock pickers catch the imagination of retail investors. Teams do not. It is easier for investment companies to market individuals than a philosophy. But they can quit, or lose their touch. Mr Woodford did both. He left Invesco in 2013. The failure of bets by his own fund management business led to its closure last week.
Schroders has a conservative style producing steady returns. Flinty chairman Michael Dobson dislikes glory hunters. The controlling family trust that booted this chief executive upstairs, to the fury of corporate governance purists, protects the business from acquirers too.
The London-listed Patient Capital Trust is more exposed. Its shares rallied a quarter on Thursday after the board appointed Schroders. The discount to net asset value was still gaping, at more than 40 per cent. Unless this narrows, it will lure activist hedge funds. They could make a profit by buying cheap shares, then strong-arming the trust into selling its assets and paying proceeds to shareholders.
To keep the PCT in business, Schroders’ illiquid equity specialists will have to earn their management fee. This will be a hefty 1 per cent of the market value, currently at £357m. Like Mr Woodford, Schroders hopes to levy a performance fee. He never performed and never collected.
The PCT was a good idea, badly executed. The UK has science and technology worthy of long-term investment. The shares are down 68 per cent since their 2015 peak. Schroders’ stock has held its ground, despite the rise of passive management. The company’s resilience gives active managers a rare chance to celebrate. They should do so collegially, though — no one likes a show-off.
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