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The boutique playbook: Majedie's lessons 15 years on

The boutique playbook: Majedie's lessons 15 years on

It took James de Uphaugh, Chris Field, Rob Harris and Adam Parker 18 months from the day they left Mercury Asset Management to the day they won their first account as independent boutique Majedie.

Honda UK, still a substantial client, was signed up in September 2003, six months after the launch of Majedie’s UK Equity fund.

The quartet had set out with a clear philosophy: to run a consistent business with a culture of ownership aligning the interests of the firm with those of its clients.

Now, 15 years since inception, de Uphaugh and Harris say they have not strayed from the original goal.

Majedie is 70% employee owned, with all of its staff having equity in the business and all of its managers invested in their own funds.

As of 30 June, assets under management (AUM) stand at around £14 billion, some £3 billion of which is in international equity. Half of the firm’s client base are pension accounts, with the remaining half other institutions, such as wealth managers, intermediaries and sovereign wealth – a change over the past two years from the historical 70/30 split.

‘Strategy across our funds has common elements and is mostly bottom-up, but there is certain flexibility,’ Harris said. ‘We spend one quarter of our time looking at the macro and three quarters engaging in deep analysis to build a strong view of a company’s medium-term potential.’

Size matters

De Uphaugh insists that staying small and disciplined has been instrumental in building a successful company from scratch.

Majedie’s £9.9 billion flagship multi-manager UK Equity fund, which has returned 14.3% per annum over the past five years versus the FTSE All-Share return of 12.2%, soft closed in 2006. The same happened with the UK Focus, UK Income and Tortoise funds which had a similar run.

Three more funds, the US Equity, Global Equity and Global Focus, which all launched in 2014 and have grown to a combined $560 million in size (£423.6 million) will announce ultimate capacity limits should the former reach £500 million and the two global funds a combined £1 billion.

Performance has been decent. Although not always beating the S&P 500 benchmark, in the three years to 30 June the US Equity fund returned 63.4% against the Equity – USA sector average of 55%. The Global Equity and the Global Focus funds returned 49% and 46% respectively compared to the IA Global sector average return of 43.1%.

‘Small boutiques should size the business at a level that will get them a good outcome,’ Harris added. ‘We are constantly conscious about our level of capacity but we want to be big enough to attract and keep good people.’

More than a few good men

Spending on staff has been key since the early days and the 2008 crisis presented opportunities. Young talent, disillusioned by big industry players that had either imploded or stopped recruiting, was keen to join smaller names.

‘We received hundreds of CVs and managed to get on board some bright people that are still with us,’ Harris said. ‘We make the effort to hire one graduate each year.’

The company now employs some 60 people across departments, with its latest addition, a graduate trainee analyst, joining in September. But boosting client services is an equal priority. According to de Uphaugh (pictured below), it is vital for new entrants into the market to have a flexible skill set; and this matches the firm’s mantra that fund managers must spend 90% of their time concentrating on investment.

Although at a slow pace, de Uphaugh and Harris continue to eye growth.

Launching a couple of US and Europe-focused funds is still on the cards, but it is all based on differentiation and the how, not the when of a potential expansion.

For now timing remains the biggest challenge. ‘There are always opportunities out there,’ they both agree. ‘It is getting to them at the right time that is important.’  

Five lessons 

1. Breed a distinctive culture of ownership that aligns the interests of the firm with those of its clients. The firm is 70% employee-owned and managers invest in their own funds. 

2. Focus on a core skill: active management of equities with a flexible investment approach. Investment strategy across funds is mostly bottom-up, with the main focus on medium term and some focus on the macro. 

3. Prioritise performance over AUM by limiting capacity in every fund. Four of the firm’s funds have limited their capacity while the three others will announce ultimate capacity limits should they reach a certain size, as described earlier. 

4. Stick to the 90/10 rule: fund managers must spend 90% of their time on investment. Managers spending a lot of time in meetings that are not related to investment is usually a problem in very large firms. 

5. Build a team with a breadth of skills in areas that really matter; invest in a graduate recruitment scheme. The firm makes the effort to recruit one graduate every year and is also hiring in non-investment areas to make sure all aspects of the business are equally efficient.


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