F&C this week wrote to investors in eight of its OEIC funds with proposals to merge these funds with other F&C portfolios. The mergers are expected to take effect by the end of June, subject to approval at shareholder meetings on 10 June.
The proposed mergers are: Emerging Markets ex Pacific Asia Equity Fund into Emerging Markets fund; European Dynamic Fund into European Growth & Income Fund; FTSE 100 Tracker Fund into B&id=F0GBR04EM8"> F&C FTSE All-Share Tracker Fund
The merging funds may be too small to be economically viable, but we note that investors now face the prospect of being transferred into a fund which they did not choose, and which may not fit their investment objectives. Investors have the option of switching to other funds but this means opportunity costs and transaction fees.
The last couple of years have been a period of uncertainty for F&C and these fund mergers demonstrate that although F&C is making progress, uncertainty remains and this can negatively affect the outcome for investors. We will monitor the progress of these fund mergers and F&C’s broader progress over the next few months.
Cavendish launches five equity funds
Cavendish Asset Management is to launch five new equity funds under its flagship Cavendish Investment Funds OEIC. The five funds are Cavendish North American Fund, Cavendish European Fund, Cavendish Asia Pacific Fund, Cavendish Japan Fund and Cavendish Technology Fund.
Cavendish cited attractive equity valuations as the rationale for launching the funds, saying they are “keen to take advantage of today’s low prices”. We generally prefer launches of funds that are designed to be long-term propositions and take advantage of management expertise at the firm, and note that funds are long-term propositions, so the level of valuations now shouldn't be the deciding factor in a fund launch.
Smith & Williamson hires Charles Deptford, formerly of New Star
Smith & Williamson has announced the hiring of Charles Deptford, formerly of New Star, where he ran the New Star Equity Income fund, among others. At Smith & Williamson, Deptford will run their UK Equity Growth and UK Special Situations Trusts and assist Rupert Fleming on the Enterprise Fund (a UK long/short offshore fund). Before New Star, Deptford was at Barings running the Barings Global Equity Income Fund. Deptford is highly experienced, with 20 years of investment experience under his belt, but the Baring Equity Income fund didn't cover itself in glory under Deptford. His next foray didn’t end well, with Henderson not retaining his services following their acquisition of New Star. To read more about New Star's hiring of Charles Deptford, click here.
Aberdeen considers the acquisition of Delaware Investments
It was widely reported this week that Aberdeen Asset Management is considering the acquisition of US firm Delaware Investments. Delaware has a significant volume of assets, particularly in the fixed income arena. Aberdeen’s fixed income capabilities have failed to get as much traction in the UK as their high profile Asia Pacific and Emerging Market equity funds, so a Delaware acquisition could bolster Aberdeen’s capabilities in this area. However according to press reports, several other bidders are circling Delaware and the outcome remains up in the air.
Henderson rebrands to Henderson New Star
Henderson has decided to rebrand itself as Henderson New Star, which strikes us as an odd choice given New Star's demise. Henderson acquired New Star Asset Management in April 2009, has launched the new brand in May 2009 and is proposing to consolidate client administration by the second quarter of 2010.
The individual funds will retain their old names for the time being: for example Henderson Strategic Bond will keep its name, and so will New Star High Yield Bond.
The consolidation process is likely to result in a single point of contact for clients and advisers. However it is also likely to result in ongoing fund mergers and closures. New Star launched a number of trendy funds over the years and some of them may not be viable, or may duplicate existing Henderson funds. Henderson has already announced their intention to complete the following mergers in the third and fourth quarters of 2009 (subject to shareholder approval): New Star Hidden Value into New Star UK Alpha; New Star Equity Income into New Star Higher Income; New Star Select Opportunities into New Star UK Alpha. Henderson has flagged that they aim to further rationalise the two separate fund ranges over time, but has not announced which funds may be affected.
Morningstar qualitative ratings and reports issued this week
Morningstar issued new qualitative ratings and reports on a number of funds available to UK investors this week, including Fidelity Funds – European Larger Companies, Blackrock US Growth and Old Mutual European Equity. Click here to see the full list.
