I'M RETIRING AFTER 40 YEARS AS A FUND MANAGER AND THIS IS WHAT I'VE LEARNT: RICHARD BUXTON ON LIFE AS A PROFESSIONAL INVESTOR

Only a handful of investment managers in the UK end up running money on behalf of investors for more than three decades. Most fall by the wayside much earlier, crushed by the market and reputational damage.

A survey last year of managers running investment trusts indicated only four had been at the helm for more than three decades. This makes Richard Buxton's longevity all the more remarkable. He has just retired from fund management with his reputation very much intact after 40 years of looking after people's long-term investments.

Since the early 1980s, Buxton has done his very best to make money for investors at a string of investment houses – Brown Shipley, Baring Asset Management, Schroders, Old Mutual and more recently Merian and Jupiter. Although analysis of his entire 40-year investment record is impossible – the data doesn't exist – fund scrutineer Trustnet says that over the past 21 years, he has generated an annual total return for investors of 7.7 per cent. Better than the average annual return of his peer group (6.5 per cent).

Here are Buxton's thoughts on everything from investing to politicians – and some of the characters he has met in his long career.

THE STATE OF THE UK STOCK MARKET

Although the UK stock market still makes money for astute investors, Buxton says it has lost a lot of its allure in recent times and is in urgent need of revitalisation. 

'For the first half of my career, we had a vibrant stock market,' he says, 'an enormous equity savings pool with shares held by insurance companies and defined benefit-based company pension schemes. UK companies were raising capital and were net buyers of overseas businesses.'

Yet, for the second half, Buxton says a 'holy trinity of accountants, actuaries and regulators have eviscerated this pool'. This evisceration started with one of Gordon Brown's first acts as Chancellor of the Exchequer in the Labour Government of 1997, when he abolished the tax credit on dividends.

This reduced by a quarter overnight the income that company pension schemes received from share dividends – and dented the financial health of many of them. This was the catalyst for the closure of many schemes.

Buxton says subsequent interventions by regulators – for example, requiring companies to account for pension fund deficits on balance sheets – exacerbated these problems. Many schemes de-risked by moving out of equities and into bonds.At the start of the 2000s, UK pension schemes had 50 per cent of their assets in equities. Today, it is around four per cent.

'There is now no natural investor base in the UK as a result,' he laments. 'Regulators and governments forget that you need a thriving equity market to support economic activity.'

Overseas companies and private equity – both massive buyers of UK businesses – have also diminished the stock market by buying up listed companies. Only last week, Citi's David Livingstone, one of the UK's top bankers, warned that the UK stock market was at risk of falling into a 'doom loop'.

Buxton says proposals put forward by the Tony Blair Institute for Global Change on the use of company pension assets to revitalise the equity market – and the economy – are most welcome.

These involve the consolidation of a multitude of pension schemes (both private and public) into a small number of multi-billion pound 'superfunds'. 

These funds would then be required to invest at least a quarter of their assets in UK-listed companies, currently starved of long-term capital. 'It's the answer,' says Buxton. 'It would help reinvigorate capital markets.' He believes Sir Keir Starmer and Shadow Chancellor of the Exchequer Rachel Reeves 'completely get this'.

Alongside this overhaul, Buxton believes pension saving for UK workers should be compulsory, with the minimum contribution set at above 15 per cent of salary. Currently, under auto-enrolment, the minimum is just eight per cent.

It's a view shared by Stephen Bird, boss of investment house Abrdn, who last week called for a similar doubling of minimum pension contributions.

'Unless we do this,' says Buxton, 'there will be a pensions time bomb coming down the road which will fall on the shoulders of our children.' He also says such a requirement would again help boost the amount of money invested in UK equities.

Although the cost-of-living crisis has quelled the appetite for such an idea – wealth manager Hargreaves Lansdown says one in five workers have stopped or reduced pension contributions as a result – Buxton points to the success of pension compulsion in countries such as Australia.

'It has been transformative on so many levels with the money being used to invest in Australian companies and the wider economy,' he says. 'Auto-enrolment is not enough,' argues Buxton. 'Compulsory saving is the way forward. We don't need to get to 15 per cent straightaway, it can be a multi-year project. With Labour likely to be in power for at least the next ten years, they can be brave enough to put this in place.'

WHY BUXTON ADMIRED MARGARET THATCHER

Buxton says he is not a supporter of any political party. Yet he firmly believes that the Conservatives are a 'busted flush'. 'Rishi Sunak is a lovely man,' he says, 'but the Tories have screwed up over the past 13 years. The country is desperate for change.'

One Tory he had admiration for is Margaret Thatcher. 'I was at school in the 1970s when the country was ravaged by the three-day working week and we had power strikes,' he says. 'What Thatcher did from 1979 onwards transformed the UK economy. The country was on its knees, but she put the market back in the driving seat and quelled the unions.'

'Not everything was good,' he adds. 'Although some of the initial privatisations such as BP and British Gas have proved success stories, later ones such as the water and rail companies have been less so.'

AND WHERE HE GOES FROM HERE...

'Working in the City is wearing,' says Buxton, explaining his decision to retire ahead of his 60th birthday. 'You get up at the crack of dawn five days a week to be at your desk – and then there is the constant pressure of making money for your clients. Enough is enough. I've done my stint.' 

Buxton lives with his wife Sarah (whom he met at Schroders) in Islington, North London. They have four cats, all named after condiments. 'Mustard and Chutney have sadly departed this world,' he says, referring to his and Sarah's long line in cats. 'But we've got Lilli [as in Piccalilli], Pickle, Tabasco and Miso [balsamic]. They are all fine.'

Buxton is not your archetypal fund manager. Educated at Oxford University, with a degree in English language and literature, he is as comfortable with a good book in his hand as he is poring over a company's financial numbers. It doesn't make him a soft touch. Far from it. Over the years, he has not been frightened to clash swords, stand his ground or be outspoken when tough words have been required.

Given his love of words, it is no surprise that he is going to write a book about the evolution of the UK economy over the past 40 years – from the perspective of someone who worked in the City.

'The journey from Margaret Thatcher to Liz Truss and beyond has been quite an interesting one, to put it mildly,' he says. 'The book is going to be an amazing project, my focus for the next 18 months. It's going to be really interesting.'

'So, From Thatcher to Truss is going to be the title?', I ask, a robin chirping away in the background. 'No, it's just a catchphrase,' he responds, laughing gently. 'I want to weave into the book some of the wonderful characters I've met in my working life,' he says. 'Amazing people that I feel privileged to have met. Yes, most have ego overload, but then meek and humble individuals don't always make the best bosses.'

Among the interesting people that he has sparred with along the way is Ivan Glasenberg, former chief executive of mining giant Glencore. 'What a character, what an extraordinary business he built. I respected him hugely,' he says.

Buxton and Glasenberg clashed in the run-up to the listing of Glencore on the London Stock Exchange in 2011 – to this day the UK stock market's biggest ever initial public offering.

At the time, Buxton was head of UK equities at Schroders and was a big investor in rival mining company Xstrata. Glasenberg was keen for Schroders to buy into the share offering, but Buxton resisted, telling him in person that he thought the shares were overpriced.

Glasenberg was not beaten. With the offering about to close, Buxton was contacted by Glencore's advisers. 'You haven't put in for any shares,' they said.

'No, I haven't, they are too expensive,' he retorted.

'Glasenberg will come and see you at 8:30 tomorrow morning,' the advisers said. He duly did, surrounded by a harem of minders.

'We went through all the issues again,' recalls Buxton, 'and I said that I would watch from the sidelines as an Xstrata investor.'

Although Glencore's shares rose sharply in early trading, they soon fell back. Shortly afterwards, Buxton attended an evening event at the Chelsea Flower Show. One of the first people he saw was Glasenberg.

'He rushed over,' says Buxton, 'shook my hand and said: 'You can buy them cheaper now.' Ivan respected people who put up a fight. He would come and see me when Glencore's results were out and tease me about the other holdings I had in the mining sector.' Glencore took over Xstrata in 2013 – and it is a top ten holding in the fund he managed, Jupiter UK Alpha, until he retired ten days ago.

2023-09-09T21:09:55Z dg43tfdfdgfd