Investors of the Schroder UK Alpha Plus fund have enjoyed annualised returns of 14% over the past 11 years, thanks to the highly competent leadership of fund manager Richard Buxton, but a question mark now hangs over the future performance of the fund following news that Buxton is resigning from Schroders to join Old Mutual Global Investors as head of UK equities.
Buxton, who manages £3.6 billion of shareholders' money in the UK Alpha Plus fund and as Schroders' Head of UK Equities oversees £6 billion of assets alongside deputy Errol Francis, will depart the company in three months' time. Francis will also leave the firm to join Buxton at Old Mutual Global Investors.
Buxton is something of a household name amongst UK fund managers, in part as a result of his outstanding performance that has seen the Schroder UK Alpha Plus fund consistently beat its Morningstar category peers by 5% each year on average since the fund's launch in 2002. He is also known as a strong advocate of good corporate governance and has been known to be vocal on several corporate management issues, most notably 
Xstrata (XTA) executives' pay and compensation as part of the tie-up with Glencore (GLEN).
In a video interview with Morningstar's Alanna Petroff just last week, Buxton highlighted betting firm Ladbrokes (LAD) as one of his favourite stock picks and said this was an example of one of those stocks "where you're backing a new management team that has gone into a poorly performing business."
For fund investors, a change of management is not necessarily cause for concern but when the manager is as celebrated as Richard Buxton it will undoubtedly raise the anxiety levels.
Ordinarily, Errol Francis would have been the natural successor following Buxton's departure, but in this instance the resignation of both men leaves a vacuum that Schroders will need to fill quickly to maintain confidence in the funds run by its UK equities team.
Schroder UK Alpha Plus has been described by Morningstar OBSR fund research director Ruli Viljoen as "one of the best UK equity funds around." The fund has held Morningstar's highest Analyst Rating, Gold, since February 2010 but the rating has now been placed under review. Francis, meanwhile, manages the £642 million Schroder UK Equity fund; the fund's Morningstar OBSR rating of Bronze is also now under review. Morningstar analysts will be speaking to the funds' new management team as soon as possible.
Morningstar has placed Schroder UK Growth (SDU), the investment trust also managed by Buxton, under review. The trust was previously rated Silver. "It's not yet clear who the natural successor from the Schroder UK Equity team could be," commented Morningstar director of closed-end fund research Jackie Beard. "Any new management decision will be made in conjunction with the board and we look forward to learning the outcomes of their discussion. Until then the rating will be under review pending clarification on the fund's future management," Beard confirmed.
Originally published at 07:00 March 15, 2013; Updated at 09:38 March 15, 2013 to confirm Old Mutual Global Investors as Buxton and Francis' new employer.
