Sanditon Asset Management is to wind up and transfer its funds to competitor Crux.
Sanditon is the second fund firm in a week to announce its decision to close, following hot on the heels of Woodford Investment Management.
The firm was launched in 2013 by renowned fund managers Julie Dean, Tim Russell and Chris Rice – all of whom had previously worked together at Cazenove Capital before it was acquired by Schroders. While the trio initially attracted investors, as their value style of investing remained out of fashion and performance lagged, assets have fallen.
Sanditon said it was unlikely to grow profitably in the coming years so took the decision to wind up the business. In its most recent accounts to March 31, 2019, the company reported profit after tax of £1.48 million, down from £1.78 million in the previous year.
Ben Yearsley, director at Shore Financial Planning, says: “That's two value-focused fund firms that have now closed inside a week; that’s unheard of. But it feels as though Sanditon is packing up at exactly the wrong time – Julie Dean’s UK fund has had a decent run of performance recently and if you think value as an investment style is coming back, then it’s a strange time to be going.”
Indeed, while Dean’s Sanditon UK fund had lagged in recent years, delivering annualised returns of just 1.34% over three years, the fund is up 12% year to date. Meanwhile, Rice’s Sanditon European fund, delivered annualised returns of 5.5% over three years and is up 11.3% year to date.
Sanditon’s board has now decided to wind up the company and pass the assets to Crux, the boutique firm set up in 2014 and home to managers including Richard Pease, Richard Penny and Jamie Ward. The rebranding of the Sanditon European and UK funds to Crux European Opportunities and UK Opportunities is expected to take place at the end of November.
Mark Little, director of Crux Asset Management, says: “The transfers of Sanditon’s funds to Crux represents a sound solution for investors given Sanditon’s decision to cease managing these funds. The Crux European and UK investment teams have a demonstrable long-term track record of delivered excellent returns for investors.”
Different Styles
But some experts warn that the transfer of assets between the two houses is not a simple swap – the two teams have different styles and investors should check they are happy with Crux’s approach before deciding whether or not to stay put.
Yearsley adds: “I like Crux and Richard Pease, but if you invested in Sanditon and Chris Rice then you’re going to be getting a very different fund with this transfer. Pease is a good manager and has delivered over the long term but his fund is spicier, more mid-cap oriented and not really a core portfolio holding. It’s a different beast to the Sanditon funds and some investors won’t necessarily be happy with that.”
The Crux European Special Situations fund had delivered annualised returns of 4.4% over three years and is up 14.2% year to date. The fund has Bronze Morningstar Analyst rating and manager Richard Pease is rated for his decades of experience and “robust stock-picking skills”. Morningstar analyst Muna Abu-Habsa says: “All told, we think highly of Pease: his extensive experience and proven experience make this an attractive offering.” However, she warns that the manager’s style means there can be swings in performance.
The Sanditon UK Select and Euro Select funds, which have a different investment strategy and can take short positions against stocks, are not included in the transfer.
