Gartmore Funds Not Compromised by Review Process

Morningstar Direct data shows Gartmore's fund sizes were largely unfazed by takeover speculation, with several recording growth in 4Q

Holly Cook 20 January, 2011 | 3:56PM

After many months of speculation, Henderson Global Investors and Gartmore Group recently announced that the former is to acquire the latter in a transaction recommended by Gartmore's board of directors and subject to shareholder and regulatory approvals. The deal is expected to complete within the next three months.

The future of Gartmore was the subject of much debate in the final two months of 2010, after the company in early November announced several high profile moves, including the resignation of star manager Roger Guy, and confirmed that it was conducting a strategic review that could lead to a merger or possible sale of the company. While many equity analysts were initially positive on the news of a strategic review, it was feared that investors, fearful of the uncertainty surrounding the company, could head for the exit.

Now that the strategic review process is complete and Gartmore's future is once again a known entity, Morningstar's latest fund size data shows that neither fund flows nor performance have been compromised over this period, with many funds in fact showing positive inflows. View fund size changes over the fourth quarter of 2010 in this table.

The only fund that appears to have had a meaningful outflow over the period is the Gartmore SICAV Global Focus fund. However, fund analysts at OBSR, a Morningstar company, believe that when this flow of assets is reviewed in the context of the total sum of money managed by the team, it is not material. Indeed, looking at the performance differential between the onshore and offshore funds over the fourth quarter of 2010, this flow can be attributed to currency movements and different valuation/pricing times.

Throughout Gartmore's process of strategic review and acquisition negotiations, OBSR and Morningstar fund analysts have maintained their usual review schedule with the managers and have been comfortable that they have continued to focus on the business of managing their funds.

With regards to the acquisition itself, our analysts believe the fit with Henderson to be positive in so far as there is limited overlap between the funds managed by both groups.

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.

About Author

Holly Cook

Holly Cook  is Managing Editor of Morningstar.co.uk

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