Edward Bonham Carter trusts robots to pick stocks

Judging by his sprightly appearance on our Zoom call, Edward Bonham Carter has spent a good chunk of lockdown twisting and stretching on his yoga mat. The fund manager, 60, reveals that regular sessions at his bolthole in the South Downs have been the key to maintaining his svelte physique – and his mental wellbeing. 

‘It’s my main method of trying to keep healthy and sane,’ he explains. 

But when he’s not been balancing on one leg, Bonham Carter has been busily contorting his business life after 26 years at asset management giant Jupiter. 

Switch: Edward Bonham Carter is backing low-cost ‘passive’ investment funds

For almost three decades now – most of it as chief executive – Bonham Carter has championed highly paid City fund managers who use their expertise to pick stocks on behalf of savers. Now, he’s started advocating for the exact opposite: low-cost passive funds where investments are picked by robots instead. 

Having stepped back to vice-chairman in 2014, Bonham Carter is set to leave the Jupiter board altogether in May as he ploughs his energies into a new role as chairman of start-up investing firm Netwealth. The brainchild of former investment bankers Charlotte Ransom and Thomas Salter, Netwealth is a money manager that invests customers’ cash at a low cost to deliver a steady income for long-term goals. The concept is hardly new. But while traditional wealth managers have tended to charge 2 per cent or more, Netwealth’s fees are less than 1 per cent. 

This, Bonham Carter explains, is because the bulk of the process is done online (although human advisers are available on request) and investments are made through passive robot funds that mirror the rise or fall of shares or bonds. 

‘You could say it’s ironic, since I’ve worked for many years as an active fund manager,’ Bonham Carter admits. ‘[But] I think active and passive funds coexist; there are many ways up the mountainside to enlightenment – there’s no one way.’

His new-found passion for passives is all the more surprising given that under Bonham Carter’s leadership, Jupiter steadfastly declined to follow asset manager rivals such as Legal & General and Fidelity by launching its own passive funds – despite savers ploughing billions of pounds into these types of investment. 

But Bonham Carter is now putting his money where his mouth is: as well as taking on the role of chairman in January, he has been among a host of City grandees who’ve provided early financial backing to Netwealth since it launched in 2015. Other high-profile investors include Lloyd’s of London chairman Bruce Carnegie-Brown; former Prudential chair Harvey McGrath; and Michael Spencer, the founder of brokerage firm Icap. 

Bonham Carter reveals he and his family are customers, too. 

‘My children are investing alongside me and my wife,’ he says. ‘I noticed that they’re finding the technology easy to access and they’re asking me more questions [about their investments] – both fortunately and unfortunately!’ Netwealth – whose customers must put in £50,000, but can then invite seven others with savings of just £5,000 each – is now on the hunt to acquire small advisory firms to boost its client numbers. It could end up competing with large rivals such as Schroders Personal Wealth, many of whom are also looking to snap up advisers. 

So Bonham Carter’s experience in mergers and acquisitions could prove useful. Having joined Jupiter in 1994, he rose to chief investment officer in 1999 and joint chief executive in 2000, before leading a swashbuckling management takeover with US private equity firm TA Associates in 2007 – just before the financial crisis took hold. 

‘It was a bracing period, both as an investor and as a chief executive. Luckily, our fund managers did a good job. We were able to float in 2010, mostly with a motivation of paying down debt because we borrowed a bit of money to buy the business. It all worked out, but there were times it got my pulse rate up.’ 

Siblings: Helena has a ‘famous’ brother

His first foray into asset management was at blue-blooded Schroders and he says his parents provided inspiration: his father was a merchant banker and his mother a psychologist. ‘I think I chose well with my parents,’ he quips. ‘Did I have a vocation? Not necessarily. Many of my colleagues think I should have done something else. I’m not sure if that’s a compliment.’

While on the subject of family, I ask about his sister, the actress Helena Bonham Carter. ‘Who?’ he replies, before breaking into a chuckle. ‘She’s constantly, when she’s in Hollywood, being asked if she’s related to the famous fund manager,’ he jests. Bonham Carter isn’t leaving Jupiter altogether in May. He will remain an adviser on green and ethical investing. He has a few other non-executive roles, too, including ITV and Land Securities Group. 

Jupiter, he explains, is still bedding down after its acquisition of fund boutique Merian Global Investors, which was also backed by TA Associates. Jupiter reported a profit of £179million last year, up a tenth on the previous year, and now manages about £58.7billion, boosted by Merian’s £17billion. 

Bonham Carter expects more fund managers will join forces as stockpickers come under pressure from low-cost robot funds and a weak economy. ‘I think there’s going to be quite a lot of mergers and acquisitions in a number of different sectors in the UK,’ he says. 

Bonham Carter leaves the Jupiter board having helped the firm grow from £4billion in assets when he joined to nearly £60billion – but he is more keen to talk about Netwealth’s huge potential than his impressive legacy. In fact, when I ask him to reflect on his time at Jupiter’s helm, he replies: ‘The last thing I did as CEO was to insist that we had two ping-pong tables. I’m a great fan.’

And with that, he’s off to challenge his children to another lockdown rematch at their rental cottage in the South Downs. 

This post first appeared on Dailymail.co.uk