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Woodford Blow, Fund Fee Cuts and GARS

NEWS YOU CAN USE: This month one multi-manager ditches Woodford Equity Income, while another increases his exposure to Standard Life’s mega GARS fund

Emma Simon 26 October, 2017 | 11:08AM

Woodford Equity Income received a further blow this month, with news that multi-manager range Jupiter Merlin had sold its £300 million stake in the fund.

Good news for investors; consolidation and competition in the industry appears to translating into lower fees with two more fund managers announcing reductions to annual management charges this month.

Elsewhere, Polar Capital became the latest fund manager to launch it’s own AI and robotic-themed fund this month. However, plans to launch the People’s Trust, a low-cost investment trust targeting longer-term returns, were scuppered, with its launch abandoned at the 11th hour, due to insufficient funding.

Robotics Fund Launch

Technology specialist Polar Capital is the latest fund manager to launch its own robotics fund. This Automation and Artificial Intelligence Fund will be run by Nick Evans, Ben Rogoff and Xuesong Zhao. This will be a global fund, and will aim to have between 50 and 80 stocks in its portfolio.

Unlike Polar Capital other flagship technology funds, it will be underweight in the US, with more significant investments in Japanese and European companies.

This follows similar launches by Axa Framlington, and Pictet. There are also a number of ETFs, by BlackRock, iShares and ETF Securities, that follow this theme.

New Impact Fund

Aberdeen Standard Investments has launched its first “impact” fund which aims to invest in companies making a positive social and environmental impact, as well as a decent financial return. 

This Global Equity Impact fund will be managed by Sarah Norris and Dominic Byrne.

The fund will use the United Nation’s document, 17 Sustainable Development Goals, as a framework to help determine which companies are delivering this positive impact.

Euan Stirling, global head of stewardship and ESG investment at Aberdeen Standard Investment, said: “Impact investing is not just about rewarding those already making a difference, but about shifting the might of the capital market to change the world for the better.”

Jupiter Merlin Sells Woodford Stake

Jupiter Merlin, the multi-manager team, has sold its £300 million holding in Woodford Equity Income. This disposal, which was made in September, comes on the back of poor performance of this £8.9 billion fund, run by star fund manager Neil Woodford.

Last month Woodford apologised to investors for lacklustre returns of late. Woodford describes the returns as “painful”, with holdings in Provident Financial (PFG) and Capita (CPI) falling sharply in recent months.

Jupiter multi-manager team, headed by John Chatfeild-Roberts declined to comment on its decision to sell out of Woodford’s flagship fund.

Fund of Fund Manager Increases GARS Holding

Fund of funds manager Rob Burdett has increased his holding in Standard Life’s Global Absolute Return Strategy fund, popularly known as GARS.

This behemoth fund, which has assets of around £23 billion under management, has seen an exodus of investors in the past year. Around £5.6 billion was withdrawn in the first six months of the year, and a further £4.6 billion was withdrawn in the second half of 2016, following poor performance. But Burdett, who co-managers F&C’s Navigator Distribution range with Gary Potter, said this fund was being “penalised a bit harshly” by investors.

He blamed many investors for failing to understand absolute return strategies adequately.

Burdett said this absolute return fund “did a good job in 2008 and 2011 when investors needed help”. More recently it has delivered negative returns, despite a more buoyant stock market.

The fund has a Bronze medal rating from Morningstar analysts, who say it has a well thought out and stable investment process, despite poor performance in 2016.

Plug Pulled on People’s Trust

Daniel Godfrey, a former head of the Investment Association, announced plans to launch a low-cost global investment trust, will not now go ahead due to insufficient funding.

The People’s Trust had been due to float on the London Stock Exchange in October. But the launch was pulled one week ahead of its planned float, after it failed to raise its target £125 million from investors. Without these funds Godfrey said the trust was not “viable”.

Godfrey added: “Unfortunately, retail investor interest alone, whilst substantial, was not enough in the absence of sufficient additional support from institutional investors and discretionary wealth managers.”

Evenlode Cuts Fund Fees

Evenlode is reducing the fees on its £1.5 billion Evenlode Income fund, managed by Hugh Yarrow and Ben Peters. Evenlode will cut the AMC on its ‘B' share class from 0.95% to 0.90% and the ‘C' share class from 0.85% to 0.80%. The charges will be effective from November 1. The fund has a five star rating from Morningstar, reflecting its strong performance relative to peers.

Merged Group Shrinks Fees

One of the first moves by the newly formed Aberdeen Standard Investments, is to slice fees on its popular MyFolio range of funds. This multi-asset fund range has around £10 billion assets under management.

The cuts will be between 0.15% and 0.325%, depending on the share class. The lower fees will be effective from November 1. A number of fund groups have reduced AMCs in recent months, including Fidelity and Baillie Gifford.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article
Security NamePriceChange (%)Morningstar
Rating
CF Woodford Equity Income C Sterling Acc125.96 GBP0.30
Provident Financial PLC799.50 GBX0.19-
SLI Global Absolute Ret Strat Inst Acc83.61 GBP0.43-
TB Evenlode Income B Acc2.77 GBP-0.65
About Author Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for Morningstar.co.uk