Fund suspensions and industry acquisitions took centre stage this week, overshadowing the few manager moves and fund launches on the menu. What follows are the highlights of this week's investment news.
Fund Launches
BlackRock Responds to Investors’ Income Hunt
BlackRock will add a fifth offering to its equity income fund range in the coming month as it responds to investor demand. The Emerging Markets Equity Income fund will join BGF Asia Pacific, BGF European, BGF Global and BGF World Resources equity income funds. This latest Luxembourg-domiciled fund will be managed by Dhiren Shah, co-manager of the BlackRock Emerging Markets fund, the Morningstar qualitative Standard rating for which is currently under review.
Manager Moves
Jose Cuervo's Departure Yields Hangover for HSBC
Following the announcement that Jose Cuervo, senior portfolio manager of the HSBC GIF Brazil Equity and HSBC GIF Latin American Equity funds, has left HSBC, analysts at OBSR, a Morningstar company, have removed their A ratings on the two funds. They also remain unrated by Morningstar’s qualitative fund rating service. Going forward, both funds will be managed by Natalia Kerkis, a senior portfolio manager based in Brazil, who has co-managed the portfolios since February 2010. Our analysts will be speaking with Kerkis in the coming months to discuss her plans for the funds.
Industry News
All Change but No Change at JOHCM
JO Hambro Capital Management (JOHCM) this week announced that it agreed for 100% of its investment management business to be acquired by the Australian-based firm BT Investment Management (BTIM). BTIM operates a boutique model and JOHCM will operate as a stand-alone boutique within the BTIM Group, meaning no changes to the day-to-day operations at the firm. JOHCM will continue to be managed by CEO Gavin Rochussen and non-executive chairman Jamie Hambro. Retention packages for current employees and employee equity holders have been negotiated by BTIM. Given that there is no change to the management of the JOHCM funds that Morningstar rates, we are maintaining our Superior qualitative ratings on JOHCM Continental European, JOHCM Japan and JOHCM UK Growth.
JOHCM has confirmed that it intends to continue to cap inflows into its funds and will add caps to its September Asian fund launches. At the recent Morningstar Investor Conference, JOHCM senior fund manager Clive Beagles explained why size does matter. Watch the interview here.
The firm’s acquisition by BTIM is subject to shareholder approval at an EGM on August 18 and also regulatory approval. The deal is expected to be completed in the fourth quarter of 2011, subject to approval by the UK Financial Services Authority.
BlackRock Hits a High Note
Even with all of the turmoil in the markets, BlackRock (BLK) closed out the second quarter of 2011 on a fairly strong note. The firm's assets under management (AUM) reached $3.66 trillion at the end of the second quarter, a more than 16% increase year over year and a less than 1% gain over the first quarter of 2011. With average AUM up more than 10% year over year, and BlackRock garnering a slightly higher realisation rate on its managed assets this year, the firm posted a more than 15% increase in revenue and a near-20% improvement in operating income during the second quarter. This puts the company in a good position to meet Morningstar analysts’ full-year expectations, which call for double-digit top-line growth and operating margins in the 35%-36% range. Read our analysts’ full research report here.
Cautionary Tale for Castlestone Investors
Several fund platforms have today put a stop to new investment into several funds under the management of Castlestone Management after the firm's offices were raided yesterday by police and the FSA. Castlestone released a statement Friday that failed to explain the reason for the raid but said that the FSA inquiry is regarding regulatory issues. Cofunds and Novia have halted investment into any Castlestone funds, while Friends Provident has put a stop to investment in the four funds from the firm that it offers in an insurance wrapper and Skandia are monitoring the situation closely with a view to suspending investment.
Cofunds and Novia have ceased to offer new investments into any of the group's funds, while Friends Provident International has halted investments into four Castlestone funds it sells in an insurance wrapper. Three of the group's Dublin-based funds--Aliquot Agriculture, Aliquot Commodity and Castlestone Intelligent Portfolio Asset Allocator--were temporarily suspended to new investments by the Central Bank of Ireland last month. Castlestone has said it is in discussions with platforms in an attempt to satisfying them that trading in its funds should continue as normal.
Nine Out of Ten Gartmore Assets Prefer Henderson
Henderson Global Investors’s interim results this week revealed the firm has managed to hold on to 91% of Gartmore assets following the acquisition in December of last year. In the six months to end-June, Henderson’s total assets under management grew to £74.4 billion from £61.6 billion at the end of 2010, while Gartmore assets amounted to £15.5 billion at last check.
Threadneedle Adds Another Asset to Its Multi-Asset Team
Baring Asset Management’s Toby Nangle is to leave the firm at the end of the year in favour of a role with Threadneedle Investments. The latter has appointed Nangle as head of multi-asset reporting to the firm’s CIO, Mark Burgess. Nangle will start his new role in January 2012 after 14 years with Barings, most recently as director of both the multi asset and fixed income teams.
Top Managers Shortlisted for OBSR Awards
Ahead of September’s 2011 Honour Awards, OBSR, a Morningstar company, this week announced the managers shortlisted for the Outstanding Investor Honour and Outstanding New Talent awards. John Chatfield-Roberts and team (Jupiter Merlin Fund Range), Harry Nimmo (Standard Life Investments UK Smaller Companies), Ian Spreadbury (Fidelity Moneybuilder Income), Tom Dobell (M&G Recovery), Alex Darwall (Jupiter European Opportunities) and Graham French (M&G Global Basics) have all made the shortlist for Outstanding Investor Honour. M&G’s French was awarded Morningstar Fund Manager of the Year - Global Equity earlier this year, while Standard Life’s Nimmo has been in the news recently following fee hikes at the fund firm.
The Outstanding Investor award is given to the manager or team that has produced exceptional returns over at least 10 years, with consideration being given to their loyalty and tenure, consistency of approach, risk adjusted returns and assets under management.
The Outstanding New Talent award is presented to the manager who has established a position in the market and has the potential to achieve strong and consistent long-term returns. Four managers have made the shortlist including Philip Rodrigs (Investec UK Smaller Companies), Dickie Hodges (Legal & General Dynamic Bond Trust), Charlie Awdry (Henderson China Opportunities) and Nick Kirrage and Kevin Murphy (Schroders Income). Watch Philip Rodrigs in action in a Morningstar interview filmed earlier this year.
Williams de Broë Stepping Closer to £10 billion Goal
Williams de Broë is in advanced talks with BNP Paribas Wealth Management over a possible acquisition of its private investment management division, in a move that would take the asset manager, a wholly-owned subsidiary of Evolution Group, another step closer to its targeted assets under management. WdB has exclusivity over the talks and striking a deal would see its AUM rise by around £1.5 billion from current levels just shy of £7 billion. The deal would mark Evolution Group’s fourth wealth management acquisition in 10 years and would be in line with WdB’s previously-stated goal to double AUM from £5 billion to £10 billion by the end of 2012. With a further £1.5 billion needed to achieve that goal following a successful BNP Paribas deal, the key question is who will be next on the investment manager’s shopping list in the coming 18 months?
