Kames’ Edinburgh hub celebrates soaring profits

Kames, which employs 250 people in the capital, has posted results showing profits up from £3.25million in 2011 to £15.8m last year, while assets have risen from £49billion to £56bn, an increase of 14 per cent.

The firm said it has built on its traditional strength in fixed income by launching a successful suite of absolute return funds, and a diversified income fund drawing on group-wide expertise, and acted as a catalyst for its historically weaker equity business and the 50-strong property team based in London.

Kames’ chief investment officer Stephen Jones, said: “We are not owned by Aegon UK but by Aegon, part of the broader asset management activity of the group.”

He added: “The offer is broader and the external growth has been characteristic of Kames’ activity over the past five years. It takes a long time to build a deep brand and we certainly think it has got resonance with the distribution channels. It is all about performance and staking out the ground we want to be known in.”

Kames has also maintained a long-standing reputation as an ethical equity specialist, led by high-performing Audrey Ryan.

“The business has expanded as assets and clients have come towards us and we have also expanded into Europe, and are across 14 jurisdictions now, so we have been recruiting to fill that,” Mr Jones says. “We have been able to take some of our growth and reinvest it in the business.”

He says Kames’ equity teams have helped drive the success of the absolute return funds, which aim to be “market neutral” and in it deliver cash plus four per cent. “They have grown from nothing five years ago to £500m to £600m in size and a cabinet-full of awards.”

As well as a continuing following for its UK-biased “dark green” (heavily-screened) ethical funds, the equity team has a strong-performing UK fund run by Stephen Adams, now head of equities, and a smaller companies fund run by Elaine Morgan which is in the top 10 per cent of the sector over a year and the top 25 per cent over two, three and four years. A global equity income fund run by Pauline McPherson meanwhile recently picked up an industry award.

“I would say our equity activity both domestically and internationally is in better shape than the historic pattern might suggest,” Mr Jones said.

He adds that investment performance is morescrutinised than ever. “The dynamics of the industry are such that the alternative – passive investment – is very available, very cheaply. So you have to define yourselves as being meaningful, consistent, appropriate to your customer base, and competitive. Going forward that is what we are trying to do.”

A Yorkshireman who worked for NatWest’s investment bank, married a Scot and came to Edinburgh after a spell at Britannic in Glasgow, Mr Jones says Edinburgh as a headquarters is “absolutely not a disadvantage” when it comes to recruitment.

“We do believe in a team approach, teams are functioning well here. It’s exciting to be part of something that is growing and making progress.”