June has been a busy month for the asset management industry: a number of high profile and experienced fund managers have left their current positions, while others have been promoted to new roles. Elsewhere, the merger between Standard Life and Aberdeen Asset Management moved one step nearer, and the Investment Association proposed a new sector for mid-caps.
Schroders Managers To Launch Boutique Business
Two of Schroders’ star fund managers have announced they will be leaving the investment firm at the end of this year to launch their own business – and will take one of their flagship funds with them.
Fund managers Paul Marriage and John Warren will continue to run Schroder UK Dynamic Absolute Return fund (in both its onshore and offshore versions) through their new venture – Tellworth Investments LLP. This fund has £380 million under management. The fund will be rebranded but will essentially retain its current investment objectives.
However, the fund managers will step down from the larger UK Dynamic Smaller Companies fund. Fund manager Luke Biermann, will take over the helm of this £622 million fund after the departure of Marriage and Warren. Biermann will start working with the existing manager, before the leave to ensure a smooth transition. Morningstar is currently reviewing its rating of this fund, following this announcement and a number of advisers have taken it off their recommended lists. For example, Hargreaves Lansdown has removed the fund from its “Wealth 150+” list, which Chelsea Financial Services has downgraded the fund from a ‘buy’ to ‘hold’.
Mark Dampier, head of research at Hargreaves Lansdown said: “These managers have added exceptional value for investors over the longer term through good stock selection, particularly among the UK’s higher-risk smaller companies.
“Great managers moving on to set up their own boutique firms is nothing new, with Neil Woodford being one of the more recent and high-profile examples. Removing the fund from our wealth list is precautionary – it is still a great fund run by the same excellent team for the next few months so there is no need for investors to make quick decisions.”
BlackRock Shuffles European Team
Vincent Devlin, one of BlackRock’s star managers, has stepped down from his fund management roles on BlackRock Continental European and European Absolute Alpha. He has also relinquished his role as co-manager of the investment trust BlackRock Greater Europe (BRGE).
In recent years Devlin has struggled to replicate earlier performance, and these funds have failed to outperform their benchmarks. BlackRock has said that Stefan Gries and Giles Rothbarth – both members of the BlackRock European equity team – will be appointed as portfolio managers on the £530 million Bronze Rated BlackRock Continental European fund.
Stefan Gries will also continue to co-manage the BlackRock European Absolute Alpha fund and will be joined by David Tovey, another member of the team with 19 years’ experience.
Devlin has managed the Continental European Fund since March 2008 – when he joined the company from SWIP. The fund previously had a silver medal rating from Morningstar, but this is under review following the departure.
Darius McDermott, managing director of Chelsea Financial Services says: “I have to say this move is a bit of a surprise. Devlin had underperformed over the last 18 months, but his three and five-year performance, as well as his longer track record over his tenure of these funds are still ahead of sector averages.
“The European team at BlackRock is one of the most stable and well-resourced, but we are not familiar with the new managers – so wait to learn more in due course.”
All Change At Neptune
Douglas Turnbull, the manager of Neptune’s £32 million China Fund has left the company with immediate effect. Turnbull took over management of this fund in 2009, and worked for Neptune Investment Management for a decade. He was made head of Chinese equities in 2013.
Turnbull is reported to be taking up an emerging market role with a rival firm.
Neptune China Fund will now be run by Ewan Thompson – currently head of emerging markets at Neptune. Assistant manager Ruth Chambers will remain on the fund. Thompson will be aided by Neptune chief executive Robin Geffen, who ran the fund when it launched in 2004.
Geffen, who founded Neptune Investment Management, said: “Ewan has proven himself as one of the best fund managers in the IA Global Emerging Markets sector in recent years, as his performance record shows.
“He has been investing in China for almost a decade and worked closely with Turnbull for a number of years. We have every confidence that he will continue to deliver strong outperformance for our investors in the years ahead across both funds.”
Elsewhere, Holly Cassell, has been promoted from deputy manager to co-manager on the Neptune UK Mid Cap Fund. She has been touted by many advisers and wealth managers an “up and coming” fund management star, an opinion borne out by this recent move.
Aberdeen And Standard Life Merger Approved
The UK’s Competition and Markets authority has cleared the proposed merger between Standard Life and Aberdeen Asset Management. The deal was also approved by an overwhelming majority of shareholders at both companies this month – paving the way for the merger to be completed in early August.
The merged company will be known as Standard Life Aberdeen, and will be jointly headed by Keith Skeoch – now at Standard Life – and Aberdeen boss Martin Gilbert.
The combined group will have £660 billion assets under management – and 9,000 employees. However it is likely that jobs will be cut as a result of this deal.
Investors have yet to get further information on which funds will be merged. But it was announced that Rod Paris, chief investment officer for the combined group, will chair the Investment Management Committee. The individual members of this committee have also been announced. Shares in both Standard Life and Aberdeen rose after the news that there was unlikely to be any further regulatory holds up to this deal going through.
Lowland Investment Trust Cuts Fees
The Silver Rated Lowland Investment Trust (LWI), which is managed by James Henderson, of Janus Henderson, has moved to a tiered fee structure.
The trust – which has assets of £414 millon – will cuts its annual management charge from 0.5% to 0.4% when assets exceed £375 million. This change will be effective from July 1. Prior to this a flat 0.5% annual management charge had applied.
Lowland will continue to pay Henderson a performance fee, when three-year growth in the portfolio is 10% more than the FTSE All-Share. However, this fee will be capped at 0.25% in future.
At the same time, the board of Lowland announced that the dividend paid to investors will be increased. The investment trust has raised the dividend every year since 1975, with the one exception of 2009.
This UK Equity Income trust has seen a 10.5% increase in its net asset value for the six months ending March 31. In contrast to many other equity income trusts, Lowland invests nearly two thirds of its assets outside the FTSE100. This saw it lose some ground to peers following the EU vote, when the many smaller UK-focused companies saw share price falls. However, it has made up some of this lost ground more recently.
IA Ditches Plans to Launch UK Mid-Cap Sector
The Investment Association (IA) has dropped proposals to launch a new UK Mid-Cap Sector. Earlier this month it had sought feedback from asset managers on the viability of launching a new sector.
This was prompted by concerns that many funds with a mid-cap focus were being unfairly compared with funds which had more of a large-cap focus, as all appeared within the All Companies sector. This issue was brought to the fore by the recent Brexit vote: where the resultant collapse in sterling boosted the share price of larger multinationals but did not give the same uplift to smaller domestically-focused companies.
However, at the end of June the IA said it was not moving forward with these plans, due to a lack of support. It is thought the proposed new sector would consist of only 14 funds, which was deemed unviable.
Not all commentators agreed with this decision. Ryan Hughes, head of fund selection for AJ Bell said: “It is not unprecedented to only have 14 funds in a sector. I’m a bit disappointed they are not progressing [with these plans] because the All Companies sector remains a bit of a mess.” He said while advisers, like himself, can pick out the mid-cap funds within this sector, this is more difficult for many retail investors.
