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46 1 Investment Week 1 21 March 2011CHIEF EXECUTIVE INTERVIEW
In ashort space of time as CEO of Matrix Asset Management, Angus Woolhouse tells EmmaDunkley how expanding the group's distribution capabilities has been essential to navigatingMatrix in the right direction
WOOLHOUSE BRINGS FRESHDIRECTION TO MATRIX ROLEAfter only a couple of months at the helm ofMatrix Asset Management, chief executiveAngus Woolhouse is already steering thefirm in a clear direction. One of his first priorities in the newly created role he took on lastDecember was to expand Matrix's distribution capabilities, by offering a broader range ofproducts to a wider network of investors."One of the first things I wanted to dowhen I arrived was to reinforce to everyoneasset management was one division - therewere areas of crossover between the products we make and our distribution networks.We needed to reorganise ourselves as onedivision, rather than as a series of individualgroups," he said.With over 25% of the local authority marketplace as clients and an established relationship with the major int ermediary groupsin the UK, Woolhouse aims to leverage uponthe firm's existing investor base to grow thebusiness. "What I would like to do is moveto a broader, full service offering, so thesegroups and distribution channels are aware ofMatrix's full potential. This is an opportunitywe can now really leverage."Woolhouse is not just limiting his vision tothe UK. As part of his ambitious expansionplans, the CEO is keen to push the firm's distribution capabilities to Europe and Asia,while seeking to hire a raft of new managers aspart of the process. "I am very keen to recruitand attract good fund managers, particularlyin the absolute return hedge fund and UCITSspace. We are looking for manag ers that coverUK long and short absolute ret urn, pan-European absolute return, and macro."Finn objectivesHaving set out his plan after only 12 weeks incharge, Woolhouse has certainly cementedhis position back in the retail arena. Prior tojoining Matrix, he was running the globalinstitutional business at Gartmore, providinglong-only funds and hedge funds to someof the largest pension schemes around theworld. "I was at Gartmore for seven years untilDecember 2010, which was fantastic, despitewhat sadly transpired at Gartmore."His tenure at Invesco Perpetual beforeGartmore gave Woolhouse experience inbuilding newly merged brands. "I joinedInvesco in 1999 and was involved in the Perpetual acquisition - running products andmarketing them across Invesco in the UK,dealing with all the integration challenges,establishing the brand and really leveragingsome of the positive attributes of the businesses at the time of a massive acquisition."During his stint at Invesco Perpetual, Wool-house worked with Mike Webb, now CEO ofRathbones, in amalgamating two disparateproduct ranges into one set, while retainingthe key fund managers. "This was my firstexposure to UK retail, the broader intermediary market and the needs of IFAs."Woolhouse first learnt his trade in newproduct development at Pepsi from 1990 to1993, followed by a period with HSBC based
in Hong Kong, where he was responsiblefor developing mutual fund sales across theAsia Pacific region. "It was a pioneering role,bringing HSBC Asset Management's manufacturing ability to bank distribution for the firsttime, when Hong Kong an d the whole of AsiaPacific was growing really fast."After gaining experience in the institutional and retail spheres, Woolhouse maintains he was lured to the CEO role at Matrix,rather than pushed into the position byGartmore's ailing business. "The opportunityto effectively run your own business and beresponsible for 95 people and a 3.25bn assetmanagement firm was too exciting to turndown. What happened at Gartmore is justwhat happened- I had gone by then."Growth rootsAs an asset management firm with rootsin pioneering tax-structured products forintermediary distribution, Matrix appealed
"One of the first things Iwanted to do whenI arrived was to reinforce to everyone assetmanagement was one division... We neededto reorganise ourselves as one division,rather than as aseries of individual groups"
to Woolhouse thanks to its retail-basedofferings and the opportunity to grow thebusiness. Established in 1987, Matrix was apioneer in the venture capital trust space,which no-one else was offering at the time,he said."It then evolved very quickly from being adominant player within that narrow productspace, as the group understood it could leverage its expertise across broader-basedproduct lines. It then looked at investmentbanking, property and a range of differentinvesting options, although its core businesshas always been intermediary distribution."Matrix has a dual strategy in terms of distributing internally manufactured productsand those from third parties. "The benefitsof both manufacturing and distributing yourproduct have always been understood. ButMatrix has been clever and led the marketin understanding if you cannot make aproduct, distribute those made by others.I f expertise lies outside then distribute itto the intermediary community, where ourrelationships are strong. No-one else hasreally done that."This model has enabled Matrix to establish some strong long-term partnershipswith groups that were not otherwise ableto access a mass market retail audience."We provide product structures that enableretail investors to invest into some of thesefirms. I f you have got strong distributionrelations, a commitment to the IFA marketplace and demand for products you cannot
BIOGRAPHY
currently manufacture, then there is a verycompelling argument that says you can continue to satisfy your clients needs, bu t youdo it via somebody else's products."Capital preservationIn 2006, Matrix shifted from its core VCToffering towards absolute return hedgefunds and UCITS III funds. "We realisedretail wanted absolute returns and the principles of capital preservation, but in a regulated UCITS III format. That is really whatthe group has focused on in the last 18months to two years." Of Matrix's 3.2bnassets under management, hedge funds nowaccount for around 657m. Matrix's assetsare also up over 25% year on year."VCTs ar e designed to reward investorswho are prepared to pu t money into companies in need of capital. Banks' lending hasbeen constrained over the last two to threeyears, therefore private investors have been
e Joined Matrix in December 201 0 as CEO of Matrix's Asset Managementdivision. Prior to joining Matrix, was head of global institutional business atGartmore. Was previously group marketing and product development director at lnvescoUK, where he was responsible for marketing and product strategy across alldistribution channels. Held a number of senior marketing positions at HSBC Asset Management,based in Hong Kong.
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t he largest sour ce of available capital tocompanie s desperate for cashflow. The gov-ernment has a respons ibility to continue toprovide some sort of incentive fo r investors,so I do not see the VCT product as comingunder pressure."The firm's number one product is its AsiaUCI TS fund, a long/short hedge fund coveringAsian equities, including Japan. The fund isa high conviction product that has de livered16 .7% per annum in annualised retur ns sinceinception in 2008."We have just concluded a sign ificant seeddea l with a leading European ins titution. Asthe fund grows - it is now over $100m in size -it starts to gather moment um. We spent a yearreally marketing the Cayman and the UCITSversion of t he fund and we are now about tomove to daily dealing, which is a very important attribute for the re tail client base. Dailypricing makes the product more like a passiveunit trust product - we will be doing this bythe end of March."Woolhouse added Matrix is in discussionwith key platforms including Towry Law,Standard Life, Skandia, Hargreaves Lansdownand Bes tlnvest to offer its As ia UCITS fun d toretail investors.
The fund 's manager, Rupert Foste r, isone of th e few that can derive alpha fromth e short book, sa id Woolhouse. "He is asaggress ive in the stock s he does no t ownas the stocks he does - he used to make a
thi rd of r et urn s from th e short book. A lotof fund managers just buy the index orshor t the index- they do no t sho rt the individu al physica l stocks . It is clear which sectors will do well and which will no t do well,in response to some of th e broader macrothemes we see in the emerging ma rkets."We like Asia a lot, because GDP forecastsacross the region are still at 6.5% and we thinkit is a very exciting area for us to be focused,both as a business, and in terms of the fund ."For those investors looking for genuinegrowt h opportunities, Wo olhouse remainscommitted to the As ia growth story, so muchso, Matrix is planning to open an office inHong Kong."This is something we are working on now- it will predominant ly be an inve stmen toffice for Rupert Foster and his team, an dover time, it will evolve t o become more of adistribu t ion arm."In a broader sense, Woolhouse said h e hasconcern s about rising inflation, a commoditybubble forming and the impac t of the deficiton UK households, all of which could drag oneconomic growth.While there are many views on wheninteres t rates should be ra ised, Woo lhousebelieves the full impact of the deficit reduction programme, on everyt hing from goodsand services to disposable income, will reallyhi t within the next six to eight months, whichcould corr ode confidence.
lnvestmentWeek 21 March 2011 47CHIEF EXECUTIVE INTERVIEW
MATRIX ASSET MANAGEMENTe Funds of funds Hedge fundse UCITS fundse Structured products
FUND RANGE
Cash fundse Investment managemente Private equity and VCTse Specialised finance
e Matrix Asia fund, focused on Asian markets.e Matrix Macro fund, a global macro equity fund.e Matrix New Europe fund, focused principally on the markets of Russia ,Poland, Czech Republic, Austria, Greece and Turkey. Matrix PVE Global Credit fund, focused on global credit markets. Matrix Redux EM fund, a macro fund focused on emerging markets.KEY FEATURES:e All funds are domiciled outside the UK and listed on the Irish Stock Exchange.e Appropriate for a SIPP, expert or institutional investment.e $100,000 minimum investment.e Fund manager is authorised and regulated by the FSA.
MATRIX ASIA UCITS FUNDe Asian equity long/short fund - typically ho lds 40 -60 stock positions.e Focus on Japan and China as the two main markets, but also includes Korea,Singapore, India and Taiwan.e High conviction fund with a thematic and macro overlay.e Focus on adding value through the short book.e Rupert Foster has 16 years investment experience in Japanese and Asianequities, seven of them as a long/short fund manager.
))FOR MORE ON MATRIX ASSET MANAGEMENTSearch www.adviserhound.com
Capital preservationDespite a definite thirst fo r i ncome amonginvestors , Mat rix does no t offe r incomepr odu cts , choosing to focus on absoluteret u rn s . "One of the mos t impor tant princip les du ri ng t imes of ma rket stress andvolat ili ty is th e pri ncipal of ca p ita l st abil ity. We are looking to preserve our clients ' wealth at a t ime when I t hink we aregoing to se e equity ma rkets undergo somevolat ility over th e next 12-18 months.""I think ri sin g commod ity prices ar enow rea lly fully being understoo d by consumers, becau se the pr ice of food andpetrol among other things has acceleratedto such a degree that, on top of t he re duction in d isposab le income , you feel youare caught in a vice. The macro environment in the UK is g oing to be challengin gover the next 12-18 months, I do not seetha t stopping, bu t if people ar e preparedto make investmen t positions, I th ink Asiapresents a much broader opportun ity ."Along with Asia, Woolhouse is bu lli shon hi s abil ity to grow Matri x 's asset management a rm in the ro le of CEO. "Eve ryone here recognised they ne eded a CEOfor asset management and th at there wasa lot of potent ial withi n t he division bu t itneeded to be harnessed. One of th e fi rs tth ings I have done is re in force intern allyto eve ryone there is a re a l opportunity tobe able to leverage what is th e mos t un iquemanufac turing product development cap ability I have come across in my caree r."We have m ore sophisticated productcrea tion sk ills in th is fi rm th an anywhereelse I have worked. But where we have pe rhaps faile d histor ically is being able to leverage those skills to the broades t poss ibledi st ribution audience."He added: "I was attracted to Matrix'sdi versified fin ancia l se r vices group ,with it s pr operty business, investmentbanking business, and as se t m anagementbu siness . Strategically, it is so importantfor a group to h ave three strong legs to th esame stool."
