February was a busy month for the funds industry with two major mergers announced. Boutique found house Jupiter has announced plans to acquire rival Merian, while Franklin Templeton is to take over US behemoth Legg Mason. Investors also saw a flurry of launches in the month as well as some tinkering to existing funds.
Lazard launched an Emerging Markets Managed Volatility fund, which aims to tap into the growth potential of the region while keeping risk fairly low. Fund managers Susanne Willumsen and Paul Moghtader will choose stocks for portfolio by taking into account a number of factors, including ESG factors. While the duo point out that “low volatility” and “emerging market equities” are words that are not usually found in the same sentence, they insist the terms are not mutually exclusive. Lazard is well-known for its expertise in emerging markets and its Lazard Emerging Markets Equity fund has a Silver Morningstar Analyst Rating.
Elsewhere in emerging markets JPMorgan is overhauling its JPMorgan Chinese investment trust with a name change and change to its dividend policy. From April, it will aim to deliver a dividend equivalent to 4% of its net asset value on the last business day of the financial year. It will be paid in four equal instalments in March, June, September and December. The trust, which has a Bronze Morningstar Analyst rating, has also changed its name to JPMorgan China Growth and Income (JGCI). Morningstar analyst Germaine Share praises the 24 years’ experience of the trust’s manager Howard Wang, who has been at the helm since 2005. “In addition to his long tenure, we like that he has consistently demonstrated a firm grasp on his portfolio,” she says.
Going for Gold
The Royal Mint launched its first exchange-traded commodity, capitalising on its reputation for gold coins and bars. The Royal Mint Physical Gold Securities ETC (RMAU) is listed on the London Stock Exchange and is the first listed financial product to be issued by the Mint and the first ETC to be launched in partnership with a European Sovereign Mint. The fund, which has an annual charge of 0.22%, is issued by HANetf. It was a well-timed launch in the end, as the gold price hit a record high shortly after. Based in Wales, the Mint was set up in 886 AD and makes all of the coins used in the UK, as well as a number of other countries. Anne Jessopp, chief executive of the Royal Mint, said the launched was a significant milestone for the 1134-year old Mint in looking to the future and diversifying its business.
The Polar Capital Global Financials trust (PCFT) is to reduce its management fee. The board of the trust has also confirmed plans to extend the life of the investment trust, which was originally fixed for seven years. Under the existing arrangement, the trust would have been wound-up by May 31 this year. It will now continue trading for at least another five years. Shareholders will be given the opportunity to exit if they wish, however, and will be able to get their money back at the net asset value, minus costs. The £299 million trust will cut its annual fees from 0.85% of its NAV to 0.70% and a higher hurdle rate will be implemented for the performance fee. The board will also allow the trust to borrow more, and has increased its maximum gearing level from 15% of its NAV to 20%.
Managed by Nick Brind and John Yakas, the trust currently trades at a 5.9% discount to its NAV and has delivered annualised returns of 9.87% over the past five years.
Robert Kyprianou, chairman of the trust, said: “The manager continues to see attractive investment opportunities in financials, the largest sector globally, which is at different stages of recovery post the financial crisis and which is under penetrated in emerging markets.”
All Change, Please
It’s all change at Jupiter Asset Management. In the same month the boutique investment house announced plans to acquire rival Merian, it has closed two funds and opened another. The Jupiter UK Alpha and Jupiter Enhanced Distribution funds will be wound up at the end of March; the pair have suffered consistent outflows after a period of underperformance. Managed by Richard Curling, the UK Alpha fund xxxxx Meanwhile, the Enhanced Distribution is closing less than five years after its launch. It has returned 1.79% on an annualised basis over three years.
Jupiter will also launch a European Smaller Companies fund, in a move that could plug the gap left by fund manager Alexander Darwall, who last year quit the firm to set up his own fund house. The fund will be managed by Mark Heslop, Jupiter’s co-head of European Growth, who recently joined the firm from Columbia Threadneedle. The fund will be a fairly concentrated portfolio of 50 to 60 companies listed in or heavily exposed to Europe. Heslop said: “European smaller companies is an exciting sector and covers a large universe of stocks where many of the companies are either unknown or under-researched. In this environment, diligent and thorough analysis can uncover hidden gems, that offer significant long-term growth opportunities and have been overlooked by the market.”
It has also been confirmed that Richard Buxton will take over the management of the Jupiter UK Growth investment trust (JUKG), which has been underperforming its peers under current manager Steve Davies. It’s the first indication of Jupiter and Merian will combine their expertise as the two companies merge. The Board of the trust announced in October that it was reviewing the investment strategy after poor performance, considering possibilities including appointing a new company to run the trust or liquidating it all together. Buxton already manages the Silver-rated Merian UK Alpha Fund and had been instrumental in the management buyout of the firm from Old Mutual. Under Buxton, there will be no change in the investment policy of the trust. Fees will also remain the same at 0.5% on assets up to £150 million, falling to 0.45% on assets between £150 million and £250 million and 0.4% for assets over this amount. However, Jupiter has said the company will not be chargeing a base management fee in 2020 as part of the transition to the new manager.
ESG Engagement
The topic of climate change is front and centre for the investment industry, and BMO Global Asset Management has pledged to intensify its engagement with companies on the issue. The investment giant will call on big businesses to adopt targets and strategies that are aligned with the goals of the Paris Agreement.
Vicki Bakhshi, director in the responsible investment team at BMO GAM, said: “Waiting for action by governments is not enough – investors and corporates need to take bold and ambitious action. For BMO GAM, this means using our influence to engage with investee companies; offering opportunities for our clients to invest in solutions; and encouraging strong action by policymakers.”
BMO will be particularly focused on 17 goals, including the phase-out of coal and sustainable food systems. It is not the first asset management firm to set out its stall on climate change. In January, BlackRock boss Larry Fink pledged that the firm would put ESG at the heart of its investment process. (LINK).
Goldman Sachs has also turned its attention to the environment with the launch of the Goldman Sachs Global Environmental Impact Equity Portfolio. It will aim to invest in companies across the globe which are aligned with key environmental themes including clean energy, water sustainability and resource efficiency. Goldman Sachs’s Luke Barrs said: “Each of our five core environmental impact themes is underpinned by some of the most powerful transitions we are seeing economies todays – the rise of alternative energy, the growth of electric and autonomous vehicles and the evolution of smart cities among them. We believe those companies that can help drive greater environmental sustainability are poised to perform well.”
