The HBOS subsidiary’s recruitment of specialist fund creation team Gatehouse is part of a strategy to more closely tailor investment products to meet investor demand
Things are changing in UK property fund management. It is not enough to employ people who get good performance out of their assets; managers now have to create vehicles to suit investor demand. Insight, the investment management arm of UK bank HBOS, looked to a boutique fund creation company to give it this direction.
The London-based asset manager, which manages £4.8bn of property, has taken on Duncan Owen and Philip Gadsden, along with their three colleagues at Gatehouse, the investment management company set up by the ex-LaSalle Investment Management directors two years ago. Owen has been made head of property, while Gadsden sits on Insight’s four-strong property board, in charge of external funds. They have been charged with boosting Insight’s assets under management and developing funds for clients.
Insight will manage Gatehouse’s funds, most notably the Westbury Property Fund, a £100m UK-listed fund open to private and institutional investors – the first such vehicle to be launched in the UK. Its success was one of the motivations for Insight to recruit its creators. Gatehouse’s team are also charged with capitalising on HBOS’s massive base of small investors, by creating products that will allow the man or woman in the street to invest in commercial property.
“Insight has a distribution network that no other UK organisation has,” says Owen. “It also has a property team that has managed major funds and brought good returns.”
Insight’s move is also indicative of a trend in property fund management to create a division between fund managers and fund creators. At Legal & General, for example, Mark Creedy was brought in to replace head of property Stuart Beevor last April. He has sorted out L&G’s troubled Bracknell town-centre scheme by placing it in a limited partnership with former rivals Schroders and Allied London, and launched an industrial development fund with Astral. In the meantime, Alex Wilson and, until his recent departure, Stephen Mundy, have carried on running the £4bn life fund.
Owen is keen to expand the Insight property team’s activities into continental Europe. “It’s not something we’ll jump into, but we plan to invest in European property and help continental clients to invest in the UK,” he says.
Insight also wants to win mandates from pension funds and to develop bespoke funds for investors, while, of course, maintaining the performance of existing funds, including the property side of the giant with-profits funds it runs for Clerical Medical and Equitable Life.
Gadsden’s team is looking at launching products for institutions and private investors, mirroring Insight’s efforts in the equity and fixed-interest sectors. “A lot of people are interested in property for its income component, but we could also look at funds that promise higher returns and more capital growth, with a bit more risk.” Owen detects a change of emphasis from mere benchmarking of returns: “We’re looking at what risk/return balance investors are looking for and giving it to them, rather than buying long-term assets to an investment formula.”
Insight Investment was launched in July 2002 to handle all of HBOS’s £70bn asset management activities. The core of the property team came from Halifax, which bought Clerical Medical in 1996. In March 2001, Halifax acquired Equitable Life’s operating assets, and took over the management of its with-profits fund.
Insight Investment
City Place House
55 Basinghall Street
London EC2V 5DL
Tel 44 20 7930 5474
www.insightinvestment.com
