It’s been a busy month in the fund management sector: with fund launches, fund manager departures, news of a trust wind-up, plus a revamp of a mega M&G fund.
Star fund managers were also in the news this month, with Neil Woodford apologising to investors, and Nick Train – manager of Finsbury Growth & Income Trust (FGT) – revealing his first new purchase for two years.
And despite the political headwinds, investors appear to remain upbeat, with news that sales of investment trusts reached an all-time high.
Investment Trust Sales at Record High
Investment trust sales via advisers and wealth managers hit a record high in the first six months of this year, according to new data from the Association of Investment Companies. In the first six months purchases via adviser platforms stood at £514 million – a significant 74% increase on the purchases made in the first half of 2016.
The most popular sectors were global trusts, UK property trusts and UK equity income trusts. Private equity trusts were fourth, a significant rise in sales of his sector on previous years.
Hargreaves Lansdown said its most popular trusts included: Woodford Patient Capital Trust (WPCT), City of London (CTY), Finsbury Growth & Income Trust, Witan (WTAN) and Scottish Mortgage (SMT), which on the back of strong performance entered the FTSE 100 this year.
Woodford Apology for Poor Performance
Neil Woodford – whose fund has a coveted silver-medal rating - has apologised to investors, after the recent poor performance of his flagship Equity Income Fund. Woodford described the fund’s performance as “very painful”. He said he was disappointed by the short-term performance of the fund, and was “right to be criticised” for it.
However, he stressed it was important to maintain his investment discipline in testing market conditions. Woodford said he wouldn't be making significant changes to the fund: “I have never been a closet index manager. I have always taken strong views about where value is in the stock market. There is huge potential in the portfolio, huge undervaluation. The short-term performance is painful and difficult but it is not a permanent loss of capital.”
Train Aims to Score With Man U Shares
For the first time in two years Nick Train has added a holding to his Finsbury Growth & Income trust, by investing in Manchester United shares. Train has bought directly shares directly from the club’s owners, the Glazer family.
Manchester United has a market capitalisation of around $2.7 billion but only around $700 million shares are available to retail investors. The trust, which has a coveted Gold Rating from Morningstar analysts, is known for its low turnover. Train’s emphasis is on buying quality companies, that offer a high return on equity and are cash generative. This has led to it having a concentrated portfolio of around 30 stocks.
Train said he was optimistic about the long-term prospects of these shares, pointing out that US investors see British football clubs as “entertainment products”. In recent years Manchester United has started paying dividends to shareholders. Train added: “It will not be long now before an internet giant bids against an incumbent football right holder. The ramifications for traditional media companies will be massive, but through the turmoil we expect the value of strong-franchised football clubs to rise.”
M&G Rebrands Global Basics Fund
M&G is widening the remit of its £2.1 billion Global Basics fund, and will rename it “Global Themes”. The fund – which was launched in 1973 – currently invests 70% of its portfolio in mining and manufacturing. M&G is proposing to change this, so the fund can invest at least 80% of its portfolio in global equities, without any sector or geographical restrictions. It will also move to a total return investment objective.
Fund manager Jamie Horvat said these changes would allow him greater flexibility. “We are keen to capitalise on sectors and industries that benefit from increased demand for healthcare and medicines to support ageing populations, water and waste management, clean energy and cyber security”. These changes are subject to shareholder approval.
Fund Manager Departures
Richard House, manager of SLI Emerging Market Debt fund has left the company, the first fund manager casualty of the merger between Standard Life Investments and Aberdeen Asset Management. Brett Diment, head of global emerging market debt at Aberdeen, will overseas the combined emerging market debt operation at the integrated Aberdeen Standard Bond unit. Craig MacDonald has been appointed as head of the fixed income team.
Elsewhere, Holly Cassell, the co-manager of Neptune’s UK Mid Cap fund is taking a two year sabbatical to go and help with Brexit negotiations.
New Fund Launches
Evenlode has confirmed it will launch a global income fund in November, to sit alongside its successful UK-based Evenlode Income fund, managed by Hugh Yarrow. The new fund will be managed by Evenlode co-founder Ben Peters and Chris Elliot.
Elsewhere, EdenTree Investment Management have launched a short-dated bond fund which will have an ethical focus and screen out companies and sectors that are not considered socially responsible. It will be managed by David Katimbo-Mugwanya and Chris Hiorns, who also manage the Amity Sterling Bond Fund.
Jupiter To Wind-Up Split Cap Trust
Jupiter has announced it is winding up its Dividend & Growth Trust at the end of November. Shareholders in this £58 million split capital investment trust have the option to take the cash, or transfer their holding to the Jupiter UK Growth Trust.
Steve Davies, manager of the Jupiter UK Growth Trust, said new shares in this trust will be issued at a modest premium so as not to adversely affect existing shareholders. Following this announcement, shares in Jupiter Dividend & Growth Trust rose by 20%, while shares in the UK Growth Trust fell, but only marginally.
Jupiter Dividend & Growth trust has been managed by Alastair Gunn since 2013.
Head Start For VCT Fundraiser
Northern Venture Trust is launching £60 million fundraiser to raise new money to invest in its three VCTs. Initially this offer is only open to existing shareholders, but after three weeks will be open to all prospective investors. The firm said its VCT ran a “diverse portfolio” of 34 unquoted companies, and are predominantly made up of management buy-outs.
Darius McDermott, of Chelsea Financial Services said: “This has been a good VCT so we expect a lot of interest in this offer.”
People’s Trust Approved for Stock Market Float
The People’s Trust – the new investment trust launched by former Investment Association chief executive Daniel Godfrey – has been approved for stock exchange membership, and has confirmed it will float on the London Stock Exchange on October 17. The trust hopes to raise £215 million during the offer period, which will close a week earlier, on October 10.
