A Citywire report by Frank Talbot, Head of Investment Research and Chris Sloley, Editor - Citywire Selector.

MILLENNIALMEGA FUND MANAGERS*

2017* Active managers in the Citywire Fund Manager database born between 1982 - 1995. A mega fund is a fund with at least $1bn in assets under management.

Millennial Mega Fund Managers Global Fund Managers

Average tenure of the millennial mega fund managers

% of the millennial mega fund managers eligible on the list that are Citywire-Rated

Average assets under management

% of global fund managers that are Citywire-Rated

Average age of millennial mega fund manager

Average tenure of fund managers globally

* Active managers in the Citywire Fund Manager database born between 1982 - 1995. A mega fund is a fund with at least $1bn in assets under management. Fund sizes figures are from Thomson Reuters Lipper or supplied by the asset manager.

5.1 years

32%

$3.94bn

7.6 years

38%

33

MILLENNIAL MEGA FUND MANAGERS* 2017

1970 1975 1980 1985 1990 1995 20001982 1995

3

When Tom Riley was a 19-year-old student, he wished he had some spare cash. But unlike most students, he was looking to invest in robotics companies.

‘I was interested by the way the world was going. Robotics is no longer about normal tech in the traditional sense; it is about intelligence. What intelligence is being added to industrials, autos and healthcare companies, and how do I tap into that?’

Fast forward a decade and at the tender age of 29, Riley is overseeing a staggering $3.7 billion robotics fund and mandate for fund management group AXA Framlington. This makes him one of the youngest fund managers in Britain.

‘I always had an interest in investing, but when you’re at university you don’t really appreciate the range of roles and opportunities in the financial industry,’ Riley says. ‘Technology spoke to me because there is clear, tangible change going on in the world.’

Riley is not alone in running billions. The millennial boasting the largest level of assets in our research is Pimco’s Nic Johnson. The 35-year-old is named as one of a three-man team on four separate funds in the Citywire database. These cover commodities, inflation and multi-asset investing, which have combined assets of $19 billion.

His previous employment includes a stint as a research fellow in Nasa’s Jet Propulsion Laboratory helping to develop Mars missions and autonomous navigation. He is now charged with plotting the course for the US group’s commodities and multi-asset efforts using his systematic know-how and sizeable strategic insight.

Riley and Johnson, however, aren’t typical. Financial information group Citywire estimates that older managers are nearly four times more likely than millennials to be entrusted with a fund worth upwards of $1 billion (£750 million) to run.

Indeed, over the past decade, the average age of fund managers has increased significantly since the financial crisis. According to Citywire they were on average just over 39 years old in August 2007, compared to nearly 47 years old today.

This move towards an older average age within the fund management industry comes despite academic studies suggesting that older fund managers are no more likely to outperform their younger colleagues.

‘It can take a long time for organisations to trust younger people with large sums of money,’ explains David Jacob, former chief investment officer of Henderson Global Investors, who has over 30 years’ experience in managing teams of fund managers. ‘And clients tend to feel more confident with the gravitas of an older manager.’

Part of the problem is perception. ‘Millennials get labelled as “the young person on the desk”. Sometimes, unless they move to another company, that perception sticks’, Jacob says.

‘Good managers spot young talent and make sure the organisation gives them breathing room to grow,’ he adds.

Millennial managersFocusing on those born after 1982 – the year that marks the start of the ‘millennial’ era according to Pew Research – Citywire found 28 fund managers aged 35 or younger who are currently running portfolios worth $1 billion or more. This is from a subset of 1,600 managers about whom Citywire has date-of-birth data.

Of those 28, a few have been running money from a very tender age. For example, 34-year-old Tuomo Mattila,

New Citywire research unearths the emerging talent being handed billion dollar portfolios at an early age – but they are still few and far between

Tom Riley, AXA Framlington

The slow march of the millennial managers

MILLENNIAL MEGA FUND MANAGERS 2017

MethodologyData was compiled by surveying 40 of the biggest fund houses operating in the pan-European markets. Findings were cross-referenced and developed in line with the available date-of-birth information in Citywire’s fund manager database, which contained a total of 15,940 fund managers as at the end of November 2017. The criteria was for managers running a fund or multiple funds with minimum assets of $1 billion. The age range of 35 years or below was chosen based on the most common definition of a ‘millennial’, which identifies this generation as those born between 1982 and 1995 – i.e. those who turned 18 around the turn of the millennium.

who works for Nordic fund giant Nordea, first cut his teeth in the industry 12 years ago, at the age of just 22. He runs a staggering $4.4 billion (£3.29 billion) in mainly multi-asset funds.

The youngest manager is 28-year-old Jack Barrat of Man GLG, who has been running a fund since the age of 24, according to Citywire’s data. What’s more, he is AA-rated by Citywire for his strong risk-adjusted performance at the helm of the Man GLG Undervalued Assets Professional fund, which invests in UK equities.

In absolute terms, one of the best performing millennial managers is Schroders’ James Sym, who is 34 years old. The Citywire AA-rated manager oversees $2.5 billion (£1.8 billion) in European equity assets and has returned 179% in sterling terms since he first started running money in May 2012. This compares with a 130% return by his average peer in the European equity market and a 131% rise by the MSCI Europe ex. UK benchmark over the same period.

But does age make a difference for these young guns?‘When I go into meetings, I don’t tend to field questions

on my age. The two years of track record and relatively strong performance data serve me well,’ Riley explains. ‘I am very vocal about the collaborative effort that goes into this. There are a lot of experienced people at Axa Framlington.’

Riley works alongside his mentor, veteran tech investor Jeremy Gleeson, who was paired with him when he joined AXA Framlington as an analyst in 2009. Riley says Gleeson has helped him to develop as a manager quickly.

‘It’s not like I was pushed out on my own. I have Jeremy as a co-manager and we sit within touching distance of several of AXA Framlington’s equities teams. So I can get

inputs on equities for European, global, emerging markets, healthcare and so on, but having said that, ultimately I am the decision-maker.’

Academic evidence – Beware the storytellersThe jury is out as to whether it’s the younger or the older managers who most frequently outperform.

Andrew Clare of Cass Business School published a study1 on precisely this question last year. He found that more experienced managers typically do outperform, but he suspected this may be due to survivorship bias and noted that the superior performance tended to come earlier in their careers. His paper also covers some of the prior literature on this subject, which has found little evidence of the benefits of age.

A 2003 paper2 by Nicole Boyson examining how age influences performance in hedge funds revealed that older managers tend to become more conservative over time, as they have more to lose. With their reputation, livelihood and personal wealth all on the line, they invariably reduce the volatility that their investors are exposed to and are typically less inclined to make potentially lucrative contrarian investment decisions.

This largely echoes research3 by Judith Chevalier and Glenn Ellison in 1999, which found that older fund managers were more likely to underperform than their youthful counter parts.

Earlier this year, research conducted by Citywire’s head of cross-border investment research, Dr Nisha Long, analysed how experience, not age, affects performance. It found that the most experienced equity managers do indeed reduce risk and are more likely to underperform. However, the opposite was true when looking at bond managers, with the most experienced displaying the most appetite for risk, typically leading to outperformance.

‘It’s harder for poorly performing bond managers to survive in the asset management industry. This is especially true early on in their careers, and when compared with poorly performing equity managers, who are often given a second chance. But as a result of this second chance, many of the most experienced equity managers underperform, and they most likely have been underperforming for quite some time,’ Long explains.

If you pick an experienced bond manager, you’re more likely to get outperformance than picking a more experienced equity manager. Experience is key and rewarding in fixed income,’ she adds.

‘And for this reason you need to be wary of choosing the most experienced managers in equities. Check if they are

4MILLENNIAL MEGA FUND MANAGERS 2017

0

50

100

150

200MSCI EUROPE EX UK TR GBPAVERAGE EQUITY EUROPE EXCLUDING UKJAMES SYM

Oct-17May-12

TOTAL

RETU

RNS (

%)

STAR SPOTLIGHT: JAMES SYM’S PERFORMANCE

1 Andrew Clare, ‘The performance of long-serving fund managers’, September 2016, Cass Business School.2 Nicole Boyson, ‘Why do experienced hedge fund managers have lower returns?’, November 2003, working paper, Purdue University3 Judith Chevalier & Glenn Ellisson, ‘Career concerns of mutual fund managers’, 1999, NBER Working Paper No. w6394

the storytellers. The more experienced equity managers may be feeding off good past performance and may have a great narrative of why you should stay invested with them.’

The investor viewDoes sitting opposite a baby-faced fund manager put investors off?

Jaime Arguello, CIO of Architas, started his career in 1986 – when some of the youngest managers were just being born – and oversees £20 billion in multi-manager funds at the UK group. For him, the question of age is largely academic when compared with performance and

relative experience.‘My preference is for managers that have experience

of market cycles of different natures – expansions or recessions, easing or tightening of monetary policy, earnings cycles, geopolitical shocks and so on,’ he says.

‘This would require seven or 10 years’ experience but there is no specific preference when it comes to a manager’s age. A 50-year-old fund manager might have more of that experience, of course, but age is no barrier.’

Frank Talbot, Citywire’s head of investment research, echoes Arguello when it comes to the question of how much ‘crisis experience’ these younger managers have to

MILLENNIAL MEGA FUND MANAGERS 2017 5

MILLENNIAL MEGA FUND MANAGERS Fund Manager Age Group Rating Assets Class Tenure Years

Jack Barrat 28 GLG AA $1.4bn Equity - UK (All Companies) 3.6

Tom Riley 29 AXA IM $3.5bn Equity - Global Themes 1.0

Roger Rüegg 30 Swisscanto $1.7bn Equity - Global 4.2

Edouard Chêne 31 La Banque Postale AM $2.6bn Equity - EuroZone 9.1

Sandro Braun 31 ZKB $1bn Bonds - Global 4.1

Jacques-Aurélien Marcireau 31 Edmond de Rothschild $2bn Equity - Global 2.3

Vincent Ijaouane 31 Pictet $1.36bn Alt Ucits - Market Neutral 3.5

Tom Holl 32 BlackRock $6.2bn Equity - Natural Resources 6.7

Eliezer Ben Zimra 32 Edmond de Rothschild $1.4bn Bonds - Global Flexible 4.8

Andrew Wheatley-Hubbard 33 BlackRock $2.3bn Equity - Global Equity Income 7.1

Thomas Wells 33 Aviva Investors $13.2bn Mixed Asset - Conservative 2.2

Blake Crawford 33 JPM Asset Management A $1.8bn Equity - Europe ex UK 10.8

André Stagge 33 Union Investment $2.27bn Bonds - Euro 6.9

James Sym 34 Schroders AA $2.52bn Equity - Europe ex UK 5.6

Jonathan Cummings 34 JPM Asset Management $8bn Mixed Asset - Flexible 4.0

Joanna Crompton 34 JPM Asset Management + $1.3bn Equity - Europe ex UK 3.9

Andrew Lyddon 34 Schroders $2.62bn Equity - Europe 7.6

Charles Biderman 34 Comgest $11.9bn Equity - GEMs 8.0

Kristofer Barrett 34 Swedbank $7.8bn Equity - Global 1.7

Tuomo Mattila 34 Nordea $4.4bn Mixed Asset - Conservative 12.3

Rachel Reutter 34 JO Hambro $1.3bn Equity - UK (All Companies) 2.4

Nic Johnson 35 Pimco $19bn Multiple 2.9

Abhishek Thepade 35 DNB Asset Management A $1.14bn Equity - India 3.5

Nick Davis 35 Polar Capital $2.23bn Equity - Europe ex UK 6.9

Sandro Grimm 35 ZKB AA $2.4bn Bonds - Swiss Franc 4.9

Grant Webster 35 Investec + $1.1bn Bonds - EM Local 6.9

Gordon Fraser 35 BlackRock $1.8bn Equity - GEMs 3.1

Iain Cunningham 35 Investec $2bn Mixed Asset - Balanced 3.0

Source: Citywire

Out of the 28 fund managers listed in this table, 10 run money as sole lead managers, while 18 are co-lead managers on their largest fund represented here. Data accurate according to Citywire fund manager database, as at November 30 2017.

MILLENNIAL MEGA FUND MANAGERS 2017 6

AVERAGE FUND MANAGER AGEStart of crisis (Aug ’07):

39.2 years Current environment (Dec ’17):

46.6 years The ages of fund managers have actually increased since the credit crisis began more than a decade ago. While the number of managers with available date-of-birth data has risen from 747 to more than 1,500 over this period, the proportion of these managers has remained consistent at around 10% of the database. Comparatively fewer young fund managers are now being handed the responsibility of managing investment assets. This is a surprising finding, as the post-credit crisis period has shown a great deal of innovation in the techniques used by fund managers, with the use of derivatives being far more widespread today. This innovation may lead you to think it’s a young person’s game, but the archetype of the wise old fund manager actually seems to be closer to the truth than it was before previously.

0

10

20

30

40

50

22-2

323

-24

25-2

626

-27

27-2

828

-29

29-3

030

-31

31-3

232

-33

33-3

434

-35

35-3

636

-37

37-3

838

-39

39-4

040

-41

41-4

242

-43

43-4

444

-45

45-4

646

-47

47-4

848

-49

49-5

050

-51

51-5

252

-53

53-5

454

-55

55-5

656

-57

57-5

858

-59

59-6

060

-61

61-6

262

-63

64-6

567

-68

Average age 39.2 years

AGE IN AUGUST 2007

FUND

MAN

AGER

S

Sample size: 747 Total managers active and tracked by Citywire worldwide: 6,789

25-2

626

-27

28-2

929

-30

30-3

131

-32

32-3

333

-34

34-3

535

-36

36-3

737

-38

38-3

939

-40

40-4

141

-42

42-4

343

-44

44-4

545

-46

46-4

747

-48

48-4

949

-50

50-5

151

-52

52-5

353

-54

54-5

555

-56

56-5

757

-58

58-5

959

-60

60-6

161

-62

62-6

363

-64

64-6

565

-66

66-6

767

-68

68-6

970

-71

72-7

374

-75

76-7

777

-78

Average age 46.6 years

FUND

MAN

AGER

S

Sample size: 1,519 Total managers active and tracked by Citywire worldwide: 16,098AGE IN DECEMBER 2017

0

20

40

60

80

100

call upon. ‘One factor that can’t be ignored is that any manager with less than eight years’ experience was not active during the darkest days of the credit crisis, which is true for 24 of the 28 managers assessed here.

‘All they have known is a world where investment markets have been driven and supported by quantitative easing and central bank intervention. With that dynamic changing across the globe, it will be interesting to see if those who have seen tough times before pull ahead.’

Grey hair gambleTom Wells, a 33-year-old fund manager at Aviva Investors, fields the age question from both sides. He works within the company’s multi-management unit and

has influence over $9.8 billion in assets. He says some investors take comfort from sitting opposite an older manager in meetings.

‘I think that one naturally assigns experience to age and with experience one assumes better performance. There are indeed numerous examples of wise old investors successfully avoiding bubbles. But there are also many highlighting the inability of highly experienced investors to accept change – a characteristic that has often resulted in investment failure.

‘So yes, it is just as tempting to invest only with star fund managers as with those with plenty of grey hair. In my opinion, however, such an approach would be a mistake. But then again, of course I’m going to say this given that I’m a 33-year-old fund manager!’ •

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© Copyright Citywire Financial Publishers Ltd (“Citywire”), 2017. The content of this presentation/guide is confidential and is protected by the laws of England and Wales and other countries throughout the world. This presentation/guide is only for the exclusive use of the intended recipient, any unauthorised reproduction, distribution or exhibition of this presentation/guide or any of its content is prohibited and may result in civil liability, criminal prosecution or both. Citywire’s name and logo and the names of any Citywire products and services included in this presentation/guide are trade marks of Citywire. Nothing contained in this presentation/guide shall be construed as conferring any licence or right under any Citywire patent, copyright or trade mark.

For more information please contact Frank Talbot & Chris Sloley

FRANK TALBOTHead of Investment Research ftalbot@citywire.co.uk +44 (0)20 840 2163

CHRIS SLOLEYEditor, Citywire Selector csloley@citywire.co.uk +44 (0)20 840 2264