This year has already seen a number of high-profile UK fund managers move on. The longest-serving of these managers is Nigel Thomas, who will be stepping down from Axa Framlington UK Select Opportunities at the end of this year after 40 years in the asset management industry. Another industry veteran, Alice Gaskell, handed over to Andreas Zoellinger at the helm of BlackRock Continental European Income Fund.
Morningstar analysts consider a fund's process, price, parent, people and performance following a fund manager exit -if any of these elements change it results in a reassessment of the credentials.
Regardless of whether it is warranted, most star managers leave a trail of outflows on their wake when departing. However, as Morningstar Direct data shows, investors often achieve similar returns if they stick with a fund rather than following the star manager to their next firm.
Here we round up some of the biggest manager moves so far this year and look at who will be taking over the running of their funds.
AXA Framlington UK Select Opportunities Fund
After 40 years in asset management, Nigel Thomas will be stepping down on 31 December 2018, with Chris St John taking charge of this £2.9 billion fund. The planned move has been well-flagged by AXA IM, plus a Luxembourg-domiciled fund was launched in March 2016 for him - AXA WF Framlington UK - signalling the intention that he would take over this product in future.
St. John's UK portfolio is similarly positioned to this fund in terms of giving a significant bias down the market-cap scale versus the FTSE All-Share Index. That said, managers have the freedom to make their own decisions and this has resulted in significant differences at the stock level between Thomas's and St. John's funds, and there is therefore scope for a very different outcome under the new manager. Given the limited experience of the new manager running sizeable assets with this type of mandate, the fund holds a Morningstar Analyst Rating of Neutral at the current time, having previously been rated Silver.
It was announced in June that Matthew Vaight is stepping back from this fund and leaving the group by the end of 2018. Vaight has been managing this portfolio since its launch in 2009 and has a high level of experience, adhering to the value tilt in his process. He will be replaced by Michael Bourke who has some portfolio management experience, more recently as lead on the M&G Emerging Markets Income Opportunities fund since May 2017. He will be the sole decision-maker following Vaight’s departure and given the appointment of a less experienced manager with a limited emerging markets track record, this fund's Morningstar Analyst Rating has moved to Neutral, having previously been rated Bronze.
JPM Global Macro Opportunities
In mid-February, it was announced that Talib Sheikh, part of the trio of named managers on this fund, was leaving JP Morgan to take up a new role at Jupiter. This meant James Elliot and Shrenick Shah remained in the hot seat, with no further name added to the fund manager roster. It’s worth noting that Sheikh’s main focus was fixed-income positioning, but the managers are supported by a global macro team that includes other fixed-income specialists and economists. While we feel that Sheikh’s departure is disappointing, the fund retained its Morningstar Analyst Rating of Bronze, based on the wider resources at JP Morgan and the fluid decision making process.
BlackRock Continental European Income Fund
After 24 years in the industry, Alice Gaskell decided to take a break and as of June 2018, the strategy has been solely run by Andreas Zoellinger. He had worked alongside Gaskell for over a decade on European mandates and on this fund, as named manager since launch in 2011. Zoellinger will have Tom Joy and Lance Enguehard work closely with him, in addition to other analysts and portfolio managers who act as sounding boards.
Gaskell’s departure is a significant loss for BlackRock’s 21-strong European equity team, which has also seen other departures in the last couple of years. While we still have a high conviction in Zoellinger’s ability to run this strategy to good effect and the team has ample resources, the departure of Gaskell coupled with other recent team changes give us pause for thought. The fund’s Morningstar Analyst Rating of Bronze is a good reflection of the fund’s relative merits, having previously been rated Silver.
This is one of the largest global emerging market debt strategies and the long-serving team head, Simon Lue-Fong, announced in his departure in May. Mary-Thérèse Barton, who has been with the team since 2004, succeeded Lue-Fong as team head. To enhance accountability at the portfolio level, strategy heads have been appointed. They will have the final say for their respective strategies.
Guido Chamorro and Philippe Petit, who have been part of the team since 2007, have been appointed provisionally as heads of this fund, but Pictet is also looking to hire a senior investment manager and will only make a definitive appointment after the new member is on board. We appreciate the firm's efforts to expand the team, but we note that this casts a cloud of uncertainty on the strategy's future leadership. The fund was therefore downgraded to a Morningstar Analyst Rating of Neutral from Bronze.
