A Glasgow stockbroker who launched a fund management business just as Northern Rock was collapsing is looking to raise £60m for his innovative tracker fund.
A Glasgow stockbroker who launched a fund management business just as Northern Rock was collapsing is looking to raise £60m for his innovative tracker fund.
Rob Davies, latterly Clydesdale Bank's private client investment manager, is modelling himself on Glasgow's successful fund entrepreneur Jim Fisher, who started up a decade ago and now manages £180m, though Davies's £1m Munro Fund has a mountain to climb.
He hopes that Fundamental Tracker Investment Management, based in Bearsden, will prove the value of his big investment idea, based on tracking the companies in the FTSE-350 which are promising the biggest dividend yield.
"I spent two years not taking any money and I put all my savings into the concept," Davies says, recalling the timing of his launch last autumn.
"We were marketing when Northern Rock happened I did have indications for several million pounds, and to be fair people did the right thing - since then the market has gone down by 20%."
But he goes on: "The fund is not about market timing, and you just don't know what is round the corner. You can't put everything on ice and just leave it, and I managed to raise a bit of money last year and get it away."
He secured backing from the quoted City of London Group for a 49.9% equity stake and cash to manage from some of its shareholders, and is now attracting interest from advisers who support more sophisticated tracking funds such as Kilmarnock-based Forty-Two Financial Planning.
On the dividend tracker concept, Davies says: "The trouble with conventional tracker funds is they get sucked up into what is popular in the long term the market is very efficient but it can get side-tracked by all sorts of short-term events. As share prices go up, tracker funds have to buy more of a bigger company, but measuring a company just by its size is not the right way to measure it."
The Munro portfolio uses unique software which weights and selects the stocks forecast to deliver the biggest dividends over the next year or two, and ignores share prices.
"Dividends are the only thing you can actually compare across sectors and across companies we look ahead to next year's consensus forecasts."
Davies, a former mining geologist and analyst who has worked for many of the City's blue-chip banks, says his overheads could support a £1bn fund, thanks to the automated process.
"Running a very small fund, the costs are against you and you haven't got the flexibility to run it as you would like. We are coming up to the first anniversary, and I think the market is cheap - no-one buys it when it is cheap, but once it has established a base, we will get people trickling money into the market."
