A fresh take on fund managing

 
Kathleen Brooks
HE MIGHT not look like your typical rebel, but Alan Miller is one through and through. First he railed against British divorce law and, since last year, he’s turned his sights to the wealth management industry.

He launched SCM Private in mid-2009 after he became frustrated with the way his personal money had been managed during the credit crunch. He decided to ditch fund managers and set up his own business, with his wife Gina Miller, to manage his money and that of other wealthy individuals.

Unlike other money managers he uses what he calls an “actively passive” investment strategy. Although he decides what to invest in, he only uses exchange-traded funds (ETFs) to execute his investment decisions. What shocked me about meeting Miller is just how animated he is. His passion is investing and sitting in his office near Sloane Square he is like a child talking about a new toy: “We have low costs so we don’t have any pressure from outside shareholders and we share the same portfolio as our clients and pay exactly the same fees as they do. We don’t get a special discount just because we manage the money.”

Miller’s association with fund management goes back 19 years. He helped set up New Star Asset Management, now part of Henderson Group, with John Duffield in 2001, where he was in charge of the New Star Hedge Fund. His record was impeccable, returning 17.5 per cent per annum during 10 years of management. However, Miller only puts 10 per cent of his success down to his role as fund manager. “A bespoke fund management system just doesn’t work,” says Miller. “The manager will always drop some balls.”

Although Miller had family connections in the City (his great uncle was the chairman of Smith Bank, the forerunner of Merrill Lynch in London) he didn’t choose the easy route: “I always wanted to join the City but I didn’t want to use my family connections. I wanted to do it my way.”

In 1986 he answered an advert in the Evening Standard: Hermes was looking for an investment analyst. He got the job and so began Miller’s long career in the fund management industry, including stints at Gartmore, Jupiter and then New Star.

It has not been plain sailing for Miller. He garnered media attention in 2005 when he challenged the High Court’s decision that ordered him to pay his ex-wife £5m although they had been married for less than three years. The case went all the way to the House of Lords. He eventually lost the case.

But having a high profile never upset him: “I do what I believe in whether it’s in my personal life or in investment.” And he is determined to keep doing what he loves: “I love the intellectual challenge,” he says. And this is a business he wants to build up for generations: “We’re not going to sell it – we’re lucky we don’t need the cash.”