River and Mercantile Fund Downgraded

Morningstar analysts have downgraded River and Mercantile UK Smaller Companies as the fund manager faces an internal conduct investigation

David Brenchley 7 February, 2018 | 12:39AM
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The River and Mercantile UK Equity Smaller Companies Fund has been downgraded by Morningstar analysts after manager Philip Rodrigs was sacked for a “professional conduct issue”.

River and Mercantile (RIV) says the issue was unrelated to his portfolio manager responsibilities and that no investor or client has been negatively affected. Shares in the company fell 7% in morning trading on Wednesday to a four-month low 316p.

Rodrigs was widely seen as a rising star in UK fund management and had overseen impressive performance of the formerly Silver Rated fund Dan Hanbury has been re-appointed manager.

He was also in charge of the R&M UK Dynamic Equity Fund, which will now be managed by William Lough, and the R&M UK Micro Cap Investment Company (RMMC), for which George Esnor will assume control.

Hugh Sergeant, chief investment officer at River and Mercantile, says he’s confident the change in team structure “can be comfortably absorbed”.

James Barham, chief executive, says admits the development is “frustrating”. However, he insists the portfolios will continue to be managed in line with its investment philosophy and process.

Morningstar Analyst View by Samuel Meakin

River & Mercantile has today announced that Philip Rodrigs, manager of the Silver-rated River & Mercantile UK Equity Smaller Companies fund, has left the business with immediate effect.

He departs following an internal investigation into a professional conduct issue, which River & Mercantile has stated was unrelated to his portfolio management responsibilities.

Dan Hanbury has assumed responsibility for the management of the fund, having managed it previously prior to the appointment of Rodrigs, and will now manage it on a permanent basis.

Rodrigs was appointed as manager of the fund in September 2014, having previously managed the Investec UK Smaller Companies fund to good effect. The experience of Rodrigs and his qualitative input into the investment process were key factors underpinning our Silver rating.

We will work quickly to assess the situation, but in the meantime, given the materiality of Rodrigs to the fund’s Morningstar Analyst Rating, the fund has been placed Under Review.

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
ES R&M UK Dynamic Equity B Acc  
ES R&M UK Listed Smaller Coms B Acc2,928.34 GBP0.58Rating
River and Mercantile UK Micro Cap Ord179.00 GBX0.00Rating

About Author

David Brenchley

David Brenchley  is a Reporter for Morningstar.co.uk

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