Skandia Investment Group this week announced that, subject to FSA approval, they will launch three new US equity funds into the UK market. The funds were previously only available in mainland Europe, the Far East and Latin America but already have £450 million under management. Skandia note increasing demand from investment advisers and their clients for US equity investment solutions as the primary reason for the launch. The three funds, which are managed by Skandia Global Funds (SGF), are Skandia US All Cap Value, run by GAMCO Investors Mario Gabelli, Skandia US Capital Growth, managed by Thomas Marsico at Marsico Capital Management, and Skandia US Large Cap Value, controlled
by William Priest & David Pearl at Epoch Investment Partners. SGF operates 22 single strategy funds across a range of global, American, European and Asian asset classes where the management is outsourced to specialist fund managers.
Mario Gabelli is a US-based value manager who we have covered for two decades. In that time, he has never strayed from his core strategy: He buys stocks trading at big discounts to his estimate of their intrinsic value that have catalysts to unlock future growth. He's also a true buy-and-hold investor, with turnover rates in the single digits. His fund's typically feature big media, communications, and industrial stakes.
Marsico is another manager we've covered for many years. He's one of the most successful growth managers in the US, and got his start at Fred Alger and Janus Capital before starting his own investment firm in 1997. As Morningstar analyst Miriam Sjoblom recently wrote of the US-sold fund which is the basis of this offering: "Marsico's proven skill at uncovering growth where others aren't looking gives this fund an edge, and his high-conviction investment style makes his best ideas more potent." He's an unconventional manager, and his fund often doesn't have much in common with its benchmark or peers, but we think he's immensely talented.
New Star's Whittaker Loses Equity Income Fund
New Star announced this week that it has replaced Stephen Whittaker with Charles Deptford at the helm of New Star Equity Income. The move, which has been expected since New Star hired Deptford from Barings, is a clear effort by the firm to improve the fortunes of the struggling fund. Deptford's hiring was announced on April 11, but he officially joined the firm at the end of June. He previously ran Baring Equity Income and Baring UK Growth.
In that context, it's worth noting that the Baring Equity Income fund--the relevant bit for this offering--didn't cover itself in glory under Deptford. Its return from November 2006 through March 2008 (from the start of Whittaker's tenure on New Star Equity Income through the end of Deptford's on Baring Equity Income) the fund lost 7.53% annualised. Whilst that's clearly better than the 9.2% annualised loss suffered by the New Star offering in the same period, its significantly worse than the 5.8% loss suffered by the average fund in the Morningstar UK Large-Cap Value category and the 5.7% loss of the average IMA UK Equity Income offering in the period. The Baring fund's longer-term record isn't much better--from 2004 through March 2008, the whole of Deptford's tenure, it returned 0.01% annualised, a bottom quintile showing relative to its Morningstar UK Large-Cap Value peers.
On the plus side, Deptford is highly experienced, with 20 years of investment experience under his belt. He has also run a number of UK Equity-Income mandates over the course of his career in addition the Barings offering. Whittaker will continue to manage New Star UK Growth. We think he deserves more time to turn that fund around, but he's clearly under pressure to deliver, and it remains to be seen how much longer the firm will remain patient with him there.
Unicorn Founder and CEO Peter Webb Resigns
Unicorn Asset Management this week announced that its founder and CEO, Peter Webb, has resigned from the firm effective immediately. Webb was the named manager on four funds: Unicorn UK Smaller Companies, Unicorn Free Spirit, Unicorn Outstanding British Companies, and Unicorn UK Income. The funds will be run by the team that backed Webb, including John McClure, Sam Barton, and Chris Hutchinson.
Unicorn as a firm has struggled to deliver competitive performance. UK Smaller Companies, Free Spirit, Master Trust, and UK Income all rank in the bottom third of their respective Morningstar categories over the past three years. The two funds with five-year records, UK Smaller Companies and Free Spirit, both rank in the bottom 20% of their Morningstar categories over that period. The funds had accordingly failed to gain traction with investors, with the largest standing at just £12.4 million in assets at last count.
Insight Appoint Former Schroders Man as Structured Products Head
Insight Investments have appointed former Schroder head of structured investments, Richard Lloyd, to head their structured solutions team. Lloyd is an expert in derivative based investment strategies, and played a key role in the creation of Schroders Income Maximiser fund. At Insight, Lloyd will report to the group's financial solutions group head Andrew Giles, and will be responsible for the design, implementation and management of investment solutions for Insight’s clients.
F&C to Merge Property Business with REIT
UK asset management group F&C have announced that they will merge their property portfolio with that of international property portfolio manager REIT. The amalgamated assets will come to £8.5bn (£5bn from F&C and £3.5bn from REIT), and will fall under the new brand of F&C REIT Asset Management. F&C will be the majority owners of F&C REIT with a 70% interest, with REIT owning the remaining 30%. In addition, F&C will pay to the owners of REIT £25 million cash and £35million loan notes. Subject to F&C REIT meeting certain EBITDA performance targets for the combined business, the ownership interest of REIT may increase up to 40% over the period to 31 December 2014. F&C UK retail head Nick Criticos has moved to F&C REIT to become CEO, meanwhile his position at F&C will be filled by John Yule. Yule is the firm’s former retail distribution head.
Fidelity to Rename Managed International Fund
Fidelity this week announced that, subject to FSA approval, it plans to rename its Managed International portfolio Fidelity Global Focus. Fidelity feel that the change will better reflect fund manager Brenda Reeds investment process, the move will also bring the fund in to line with Fidelity’s SICAV funds – also managed by Reed.
