Turnaround at Woodford’s Patient Capital Trust

NEWS YOU CAN USE: This month, record funds sales were reported, fees were cut on several investment trusts and a number of funds rebranded

Emma Simon 30 August, 2017 | 9:25AM
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Despite wider economic uncertainties, August continued to be a positive month for the fund management industry: figures published this month showed investors record fund sales in the first half of this year, while veteran fund manager Neil Woodford reported more encouraging six-month results on his flagship investment trust. Elsewhere fund managers continued to squeeze fees on investment trusts, and there was a high-profile manager move in the fixed income sector.

Fund Sales at Record Levels

Investors ploughed a record-breaking £18.4 billion into funds in the first six months of 2017, but were more cautious about investments in UK-based equities.

The total amount of money now invested in UK funds is now £1.1 trillion, according to the latest figures from the Investment Association.

The most popular fund sector was the Targeted Absolute Return sector, which had a net inflow of £2.2 billion in the first half of this year. The Strategic Bond sector attracted £1.8 billion, while Global Equity sales were £1.6 billion.

Performance Picks Up at Woodford Patient Capital

The Woodford Patient Capital Trust (WPCT) has published more encouraging results for the first half of this year, after a more challenging start. The £859 million trust launched in April 2015.

The trust’s share price rose by 7% and its net asset value (NAV) increased by 8% during the first six months on 2017. This compared to share price falls of 9.9% in 2016 and a 8% drop in its NAV in 2016.

Manager Neil Woodford said he was pleased with this progress but added that this improved performance was “insubstantial in the context of what, I believe, lies ahead”.

The trust invests in both quoted and unquoted companies and aims to deliver returns in excess of 10% a year over the longer term.

One of the best performing stocks within the portfolio was estate agents Purplebricks (PURP).

Name Change for JPM Fund

The JP Morgan Asia fund has revised its investment objectives, and will change its names to JPM Asia Growth next month, to provide greater clarity to investors. These changes will be effective from 29 September.

The fund, which has £177 million under management, and a five-star performance rating is managed by Joanna Kwok and Mark Davids. Its new investment objective will be to “provide long-term capital growth primarily in a growth biased portfolios of companies in Asia”.

Investors who are unhappy with this change have the option to switch to another investment without paying a fee. JP Morgan said the risk level and fees on the fund remained unchanged.

IA Forms New ETF Committee

The Investment Association has formed a new committee which will look at issues surrounding the sales and regulation of exchange traded funds. Part of the committee’s remit will be to look at education investors about these low-cost passive products.

The committee, includes representatives from Vanguard, Investors PowerShares, BlackRock’s iShares and Lyxor Asset Management, some of the biggest ETF sellers in the UK.

Adam Laird, head of ETF strategy at Lyxor said: “The committee is a continuation of the IA's business and an understanding that ETFs are funds and as much a part of the landscape as unit trusts and OEICs.”

Fees Cut on Throgmorton Trust

BlackRock has altered the charging structure on its £310 million Throgmorton (THRG). The annual management fee has been halved, from 0.7% to 0.35% of gross assets. But, from December this year BlackRock will increase the performance fee from 10% to 15% of its NAV total return outperformance of the benchmark, over a rolling two-year basis. However, to limit the size of this fee BlackRock will reduce the cap on its performance fee from 1% of gross assets.

Fee Squeeze at Rathbones

Rathbones is reducing the annual management charge on its Recovery fund from 0.75% to 0.45%. These changes will be effective from October 23 this year. This change follows the departure of Jo Rands, one of the co-managers on the fund. The £62.4 million fund will continue to be run by Alexandra Jackson while the fund managers finds a replacement for Rand.

As part of this shake-up Rathbones is also renaming the fund Rathbone UK Opportunities although the investment remit will stay the same.

Liontrust Poaches Kames Fund Managers

Liontrust Asset Management is to launch its first bond funds after hiring two veteran fund managers David Roberts and Phil Milburn from Kames Capital.

The pair will join Liontrust next year where they will launch a suite of fixed income funds, including a Strategic Bond fund, a High Yield Bond fund and an Absolute Return Bond fund.

The Kames Strategic Bond fund that Milburn and Roberts ran will be managed by Juan Valenzuela, currently co-manager on the fund. He will be assisted by Alex Pelteshki, who joined the fund manager three years ago.

New Baillie Gifford Fund

Baillie Gifford has launched a new Positive Change fund. Like many sustainable and ESG funds this does not simply ‘screen out’ certain sectors but seeks to invest in companies delivering positive change. The fund will have a relatively concentrated portfolio of between 25 and 50 stocks, and will be fund by a team of six fund manager and two corporate governance specialists.

The portfolio will invest in four broad areas: social inclusion and education, environment and resource needs, healthcare and quality of life and what Baillie Gifford calls a “base of pyramid companies”: these are companies that address that help improve the wealth and conditions of those at the bottom of the global income ladder. The fund will have an OCF of 0.65%.

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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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Baillie Gifford Positive Change B Acc312.30 GBP-0.06Rating
BlackRock Throgmorton Trust Ord628.00 GBX-2.03Rating
JPM Asia Growth C Net Acc2.71 GBP0.26Rating
Purplebricks Group PLC  
Rathbone UK Opportunities I Acc746.29 GBP0.95Rating
Schroders Capital Global Innov Trust Ord12.35 GBX0.41Rating

About Author

Emma Simon

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

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