Baillie Gifford veteran Peter Hollis will be replacing Michael MacPhee in co-managing the Baillie Gifford European fund. Hollis joined the firm in 1989, focusing on UK and North American equities prior to joining the European team in 2004. Also on the fund are Angus Franklin and John Burke, who joined the European team in 2003 and 2004, respectively. Although in the last year the fund has bested its Morningstar Europe Ex-UK Large-Cap Equity category peers by one percentage point, its performance over the longer term has bee
n subpar as it trailed both its category average and the MSCI Europe Ex-UK index over the last three, five and ten years to 30 April 2008.
Ben Lloyd is also stepping down at Baillie Gifford Pacific fund. He will be leaving the firm in July and will be replaced by Mike Gush in June 2008; a month prior to his departure. Gush has been an investment manager on Baillie's emerging markets team since joining the firm in 2003 and will be assisted by existing co-manager Gerald Smith who has been on board this offering since January 1995. The fund has been a strong performer in its Morningstar Asia Pacific Ex-Japan Equity category, residing in the top-quartile over the last three, five and ten years. It is considerably more aggressive than its average competitor, however.
Investec Adds Resources Fund
Investec Asset Management is the latest firm to jump on the resources bandwagon. It has announced its plan to launch an unconstrained Enhanced Natural Resources fund--a UCITS III offering that will be able to take both long and short positions with the aim of delivering more competitive risk-adjusted returns. The initial charge for the P share class will be at 4.5%, with an annual management fee of 1.5% and a hedge-fund style 20% fee on gains above LIBOR +4%. That strikes us a hefty price to pay for a fund that focuses on a relatively narrow slice of the world equity pool. It also means that when resources are running up sharply, as they have been the firm will make 20% almost regardless of stock selection skill given that it's being compared to a cash plus benchmark . Further, there is no downside penalty should it underperform. The firm has global commodities and resources teams in London and Cape Town, covering base and precious metals, energy, agriculture and soft commodities. The group’s first launch in that arena took place in November 2004 in the form of Investec Global Energy fund, which has been a top-quartile performer over the last one and three years.
Standard Life Investments USA Enhances US Equity Capacity
Standard Life Investments (SLI) has appointed Glen Petraglia as Senior Vice President for its US Equities division within SLI USA. The subsidiary was founded in 2002 to boost the firm’s coverage of the US market as well as providing US investors with private equity, global equity, real estate and absolute return products. Petraglia will be based in Boston with a team of nine analysts managing close to $7billion. In his new role, he will take charge of sourcing investment ideas within the consumer sector as well as running a portfolio that is benchmarked to the S&P 500.
IMA releases April 2008 Investment Fund Statistics
UK domiciled funds under management, as published by the IMA, have increased by 4% since March 2008 to total £450.3 billion. Overseas funds under management saw a simultaneous 4% increase in value to £381 million over the same period. This figure, however, represents a 2% fall from levels seen in April 2007. Net sales of UK domiciled funds clocked-in at £150 billion, with bond-fund inflows significantly exceeding equity-fund inflows. Within equities, the IMA UK All Companies sector witnessed the highest share of gross sales, but also had the highest net outflows, at £182 million. The UK Other Bond category was unsurprisingly the best selling sector for UK domiciled funds, with net inflows at £456 million.
New Star Proposes an Employee Performance-based Share Plan
New Star has released its proposal to introduce an incentivising share plan for key employees across the firm, involving the issue of 35 million new shares. The firm says this is to better align the interests of key shareholders in the firm and its key executives. The shares will vest subject to achieving pre-determined targets for senior management, portfolio managers and the sales team, and the share price will influence the size of the award given to participants in the scheme. As concerns managers of retail funds, their performance targets will be based on 12-month performance relative to peers as well as the growth in assets under management. Such terms are not uncommon. However, in assessing fund manager compensation, we consider 12-months too short a period to be optimal for aligning managers' interests with fund owners. We also dislike a heavy reliance on asset growth in manager pay, as it can incent managers to allow funds to grow beyond optimal capacity.
