Bad News for Buy-to-Let Investors and Emerging Market Funds

NEWS YOU CAN USE: This month; property investors have been dealt a blow by Chancellor George Osborne and emerging market investors have seen several key manager changes

Emma Simon 3 December, 2015 | 6:29AM
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It has been another volatile year in Asian stock markets, topped off with the news this month that Japan has, once again, slid back into recession.

Against the backdrop of economic turbulence, some fund management groups have been reviewing and repositioning funds in this region and this has led to a number of fund manager moves.

Elsewhere it remains to be seen whether George Osborne’s latest attempts to put the brakes on the runaway buy-to-let market will lead to an unexpected boon for the investment industry. The increase in stamp duty on second homes, announced in last week’s Autumn Statement, alongside the increased tax on rental yields, may make this a far less attractive option for potential investors who may now be looking for new homes for their money.

Shake-Up at Stewart Investors

Veteran fund manager Angus Tulloch is taking a step back from his leading role at Stewart Investors. He will relinquish the fund manager’s reins on his flagship Asia Pacific Leaders fund, and will become just co-manager of the Asia Pacific fund.

The follows the decision this summer by First State to split its business in two, rebranding its global and Asian funds as Stewart Investors.

The £7.5 billion Pacific Leaders fund will now be managed David Gait and Sashi Reddy. The fund’s remit will also change to a sustainable fund, subject to the usual regulatory approval. These changes have meant Morningstar fund analyst have placed the fund’s rating Under Review.

Tulloch has been one of the most successful and high profile fund managers in this region, and has run Asian mandates for nearly 30 years.

The move comes just a couple of months after Mark Mobius, another emerging markets veteran, announced he is stepping down from his lead manager role of the Templeton Emerging Markets trust (TEM). Morningstar analysts initially also put this fund Under Review, but it has since been moved to a Neutral Rating.

Financial advisers said investors shouldn’t panic though. These are both long-standing and successful managers and the fact both will remain on the investment board of their respective fund groups, as well as overseeing the handover period, should ensure continuity for investors.

Aberdeen Asian Manager Departs

Aberdeen lost one of its veteran Asian-equity experts this month. Chou Chong, the investment director of Asian equites, will leave the company after 21 years. He has been based in the company’s Singapore office since 2008, from where he led the team that managed a wide range of the company’s Asian equity funds. His role will now be taken by Flavia Cheong.

New Fund Launch for Henderson

November saw the launch new funds – bucking the recent trend of fund closures.

Henderson Global Investors led this way by extending its range of income options, with a new Pan European Dividend Fund.

This fund will be managed by Nick Sheridan, who already manages the company’s Horizon Euroland fund. The new fund will be Luxembourg-domiciled and aims to deliver an above-average income from pan-European stocks, an area that is ripe for growing dividends according to Sheridan.

Sheridan says that negative sentiment remains built into European share prices and by using strategies devised for his Euroland fund, he’ll attempt to identify high-yielding European companies that are priced below their intrinsic value.

According to the Henderson Global Dividend Index European dividends have grown 11.2% since 2009.

Schroders New Recovery Fund

Schroders is also extending its fund range, by launching an onshore version of its Global Recovery fund. This will be run by Nick Kirrage, Kevin Murphy and Andrew Lyddon. It will follow a similar approach to the popular UK Recovery fund run by Kirrage and Murphy. Their success with this fund – which aims to look for undervalued stocks – has earned them a coveted Silver Rating from Morningstar analysts.

The managers believe this is a good time to launch such a fund, as ‘value’ investing itself is currently being out of favour: saying the gap between value and growth funds is at its largest margin for more than a decade.

Lyddon said: “This gap is unusual, and history suggests that value should recover and outperform over time. Given the scale of value's recent weakness, the potential recovery could be significant.”

JPMorgan Shuts Fund-Of-Funds

As new funds open, so other ones close. Leading fund manager, JP Morgan Asset Management has closed its ‘Fusion’ fund of fund range, which were launched just two years ago. The asset manager said this this was due to a lack of interest from advisors and investors rather than the performance of the fund. The five funds, run by Tony Lanning and Nick Roberts, were collectively worth just £54 million.

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.

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Emma Simon

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