Morningstar has put the Man GLG Japan Core Alpha fund under review after the announcement fund managers Stephen Harker and Neil Edwards are to retire.
Harker and Edwards will step down from the fund by the end of March 2021, with Jeff Atherton taking over as lead manager from January 1, 2021. As well as having a lengthy handover period, Harker is set to remain with the group on a consultancy contract for a year to help ensure a smooth transition for the fund.
Morningstar analyst Robert Starkey said the departure of the managers would be a loss of experience for the strategy. “Given that the managers were an important factor in our overall conviction in the strategy, we have placed its Analyst Rating under review while we assess the impact of the news.”
The Man GLG Japan Core Alpha fund had previously held a Bronze Morningstar Analyst Rating. The value focus of the fund had seen it underperform its peers over the past year, with the fund down 11.4% in the year to March 2020, some 8.17 percentage points behind its index.
But Morningstar analysts retained conviction in the fund’s “robust, repeatable process that focuses on the large-cap segment of the market”. At the last rating review of the fund in April, Starkey said: “Despite the headwinds, the managers have stayed true to their style. Harker has been at the helm of this strategy through multiple market cycles and is supported by a strong team, whose experienced and disciplined approach to value investing helps it remain calm and composed in assessing investments in such environments.”
The fund had previously been rated “high” on its People pillar, “Above Average” for Process, and “Average” for its Parent company. While it is down 21.67% year to date, the fund has produced annualised returns of 4.69% over 10 years and yields a healthy 3.85%.
Currently, the portfolio’s largest weightings are to financial services and consumer cyclical companies, which together account for more than half of its £1.12 billion of assets. Largest holdings including financial stocks Mitsubishi UFJ and Sumitomo Mitsui, as well as Nippon Steel and Honda Motor.
Other industry professionals have been quick to praise the fund under Harker’s leadership, following the announcement of his retirement. Adrian Lowcock, head of personal investing at Willis Owen, said: “Harker is the face of the strategy and is synonymous with Japanese equity investing and his philosophy is instilled in everything the team do. That philosophy won’t leave with Stephen and Neil’s exits and, because of that, investors don’t need to rush to make a rash decision about whether or not to stick with the fund.”
A change of fund manager is a common time for investors to take stock and consider whether the investment is still right for them - and we have looked at the pros and cons of selling an investment as part of our personal finance series.
