LONDON -- Nicola Horlick's recipe for success: steady and superior performance.
The woman dubbed "supermum" by the British tabloids for managing both a large family and a high-profile career projects Societe Generale Asset Management UK -- the London-based arm of the Paris money manager -- will garner L5 billion ($8.3 billion) in five years.
But Ms. Horlick doesn't expect success to come overnight, despite pulling in more than L200 million in the firm's first two months. That total included a L110 million U.K. equity brief from the L500 million Devonport Royal Dockyard Pension Scheme, Plymouth, within days of the firm's official launch in late January.
In the institutional business, Ms. Horlick said, there often are some "brave people" who give money in the beginning, but a lull usually occurs in the second year.
Neil Skinner, pensions manager at Devonport Royal Dockyard fund, said trustees not only liked both SGAM's people and investment processes, but also thought the fund might "get better service" as the first client through the door.
SGAM UK officials "expect more of the L5 billion coming through in years four and five," Ms. Horlick said. Assets under management could be higher "if performance is really good."
The London-based firm also might get a boost from SocGen's three U.K. pension funds, which are expected to turn over some assets to the fledging firm.
Rufus Warner, director of marketing, said the firm has won a L25 million multiasset-class mandate from a U.K. pension fund, but declined to disclose the client.
In addition, the firm has raised more than L10 million from a U.K. growth equity unit trust, has announced the launch of a global technology retail-oriented fund, and has been handed responsibility for managing a combined L60 million in U.K. stocks for two SocGen mutual funds.
"We're keen to get some multiasset briefs under management now," Mr. Warner said.
But consistent performance is the key to building the operation.
Ms. Horlick said the firm's goal is to beat the median performance by one percentage point a year, while keeping tracking error to between 3% and 5%. In five years, that would place the firm in the top quartile; in 10 years, it would be in the top decile, she said.
"We are not going to take massive bets against the benchmark," but will "add value through stock selection," she said.
Joint managing director John Richards agrees large bets are not required, Ms. Horlick said. "Most people want consistent outperformance of the benchmark."
During his tenure as head of Mercury Asset Management Ltd.'s select team, however, Mr. Richards was noted for taking very large sector bets against the benchmark. Those bets resulted in volatile performance -- including substantial underperformance leading up to his departure last May (Pensions & Investments, March 23).
"In good years, it paid off hugely. In bad years, it was a catastrophe," said one industry observer.
At SGAM, Mr. Richards oversees asset allocation and bonds, while Ms. Horlick is head of equities. They have brought on Peter Seabrook as head of U.K. equities from Robert Fleming Holdings, where he was U.K. chief investment officer.
Some observers predict a clash of egos. "There are distinct question marks as to whether they will build a team that works well together," one expert said.
Ms. Horlick rejected this contention. "You cannot succeed in fund management without working as a team," she said.
Some think the addition of Keith Percy -- Ms. Horlick's mentor at Morgan Grenfell Asset Management until he was forced out following the Peter Young scandal -- might pull the group closer together.
Mr. Percy is advising both Paris-based SGAM on its global strategy and the London-based unit. He will assist the London operation in asset allocation. He will use his extensive business contacts, but he cannot deal with clients while an Investment Management Regulatory Organisation investigation stemming from the Young affair hangs over his head.
SocGen clearly is placing a big bet on the U.K. operation: although it's a startup, the firm employs 51 people, including 14 investment professionals. By the end of the year, totals are expected to top 60, with 18 to 19 investment professionals, Mr. Warner said.
The pension consultant community is clearly split on its views of the firm. Some say it will take time to see if the firm gels; others have put it on their "buy" list -- including William M. Mercer Ltd. officials, who advised the Devonport Royal Dockyard fund.
Despite reservations, some consultants believe SGAM UK will succeed, given its high profile and the U.K. pension market's newfound openness to money managers outside of the Big Four.
