The first month of the year has seen a whole host of new fund launches. BlackRock has launched the BFM Global Unconstrained Equity Fund (UK), a concentrated portfolio of 20 to 30 stocks from across the globe. The fund will focus on developed markets and particularly Europe and the US, using an ESG screen which will exclude some stocks on environmental, social and governance factors, as per BlackRock’s pledge to make sustainable investing a core part of its process. The fund will be managed by Alister Hibbert, who runs the BlackRock European Dynamic fund, and Michael Constantis, who runs the BGF European Special Situations fund.
Meanwhile, St James’s Place has taken the mandate of its Global Emerging Markets fund away from Janus Henderson. From February 17, 2020 the fund will be managed by Edward Robertson of Somerset Capital Management. The fund runs a tight portfolio of no more than 40 stocks, with a quality investment strategy.
And Franklin Templeton’s Paul Spencer announced plans to retire after 33 years in the industry and 14 years at the firm. Richard Bullas will replace him as lead manager of the Franklin UK Mid Cap fund from the end of June.
In the closed-end world, Nippon Active Value Fund (NAVF) has floated on the London Stock Exchange in a £200 million listing. The investment company focuses on companies that have the majority of their operations in Japan.
And HANetf launched Europe’s first medical cannabis exchange-traded fund, offering investor exposure to the burgeoning industry. The Medical Cannabis and Wellness UCITS ETF (CBSX) will be listed in Germany and charge 0.8%. In Europe there are now 28 countries will some form of medical cannabis legalisation, and it has also been legalised for medical use in Canada and a number of US states, and Morningstar analysts expect the North American market to be 13 times larger by 2030.
Falling Fees
Fees continue to be front and centre as investors flock to low-cost passive funds. Columbia Threadneedle announced plans to remove the performance fees on four of its open-ended funds: Threadneedle UK Absolute Alpha, Threadneedle American Extended Alpha, Threadneedle Global Extended Alpha, and Threadneedle UK Extended Alpha. Threadneedle’s Alastair Caw says: “It’s paramount our clients receive an understandable fee structure while also attaining value for money.”
The first fund groups have published their value of assessment reports in January, with some promising results. New regulations came into effect in 2019 which require funds to demonstrate how they are providing value to investors. It is hoped the rules will encourage more transparency and fairness. Already HSBC Global Asset Management and Invesco have announced plans to transfer investors expensive legacy share classes, to cheaper so-called clean share classes.
In its assessment of value report, Rathbone said it had already switched investors into cheaper “Institutional” share classes, saving investors between £6.25 and £10 a year on every £1,000 invested, as well as removing initial charges from its entire fund range. The firm has also decided to close its Rathbone Global Alpha fund as it has consistently failed to meet its investment objective.
Woodford Update
Woodford has continued to dominate the attention of many investors. Unitholders are now set to receive the first tranche of their money back from the fund, which has been gated since June 2019. The liquid part of the portfolio, representing around three-quarters of assets, has now been sold and investors will receive back between 46.2p and 58.9p per share depending on which share class they hold.
However, investors received a further blow when Link Fund Solutions, the fund’s administrator, revealed they can expect to pay around £10 million in fees for the winding up of the fund. In a letter to investors, the firm said some £5 million in costs had been accrued since the decision to wind up the fund in October, and provision for another £5.3 million of costs had also been made. Link has waived its own fee during the process but will have to pay BlackRock and Park Hill, the firms that have been tasked with liquidating the portfolio. A further provision of £22.5 million has been made to cover “further funding and commitments” made by Woodford to his investee companies.
