The Funds Industry That Never Sleeps?

FUND TIMES: You may have been resting in recent bank holiday-riddled weeks, but the funds industry has been particularly busy

Holly Cook 6 May, 2011 | 6:17PM
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Despite two long weekends, between which half of the UK left their desks to bathe in sunshine, the funds industry avoided the temptation to rest and instead engaged in several new launches, strategy changes, manager moves and company acquisitions. What follows is some of the news highlights from the funds industry over the past three weeks.

May 3 - 6

Manager Moves
Cazenove Capital Head of Pan-European Equities Tim Russell is to step down in July and draw an end to his more than a quarter of a century spent in the investment industry. Russell will be succeeded by Chris Rice, and Steve Cordell, David Docherty and Julie Dean will take over the management of several Russell’s UK equity funds.

Following this news, fund analysts at OBSR, a Morningstar company, have decided to maintain their A Rating on the Cazenove UK Absolute Target fund, management of which will pass over to Cordell. Cordell is co-manager of Cazenove’s well-established European hedge fund offering, which our analysts have been following for a number of years, and they believe Cordell brings the expertise he has acquired in managing this fund to the management of the dedicated UK proposition. Cordell’s Cazenove Pan Europe fund is rated Superior by Morningstar fund analysts and A by OBSR analysts.

Plans for Docherty to manage the Cazenove UK Growth & Income fund also has not impacted the fund’s Morningstar Superior rating and OBSR A rating. Docherty was appointed co-manager in January 2009 working alongside Russell and is already responsible for the day-to-day management of the fund.

Similarly, the appointment of Dean as manager of the Cazenove UK Equity fund presents no reason to change the fund’s OBSR A Rating. As with Docherty, Dean was appointed co-manager in January 2009 alongside Russell and is also responsible for the day-to-day management of the fund. Dean also manages the OBSR A-Rated Cazenove UK Opportunities fund.

Artemis has expanded its global strategies capacity with the hire of Simon Edelsten, who left Taube Hodson Stonex in 2010, and Alex Illingworth, formerly Director of Global Equity at Insight Investment. The independent specialist fund manager said the new recruits will begin building a global stock-picking franchise for both institutional and retail clients.

Scottish Widows Investment Partnership has recruited Julia Campbell as Senior High Yield Analyst on its fixed income high yield team. In her new role, Campbell will report to Steven Logan, Head of European High Yield and will be based in London.

New Launches and Strategy Changes
M&G’s Richard Woolnough has reduced the duration of his Optimal Income fund portfolio to just 3.3 years in the expectation that yields on short-dated government bonds will rise. The new duration level compares to a neutral position of 5.4 years and a duration position of 5.0 years at the end of 2010. The change to the portfolio, which holds £3.9 billion in assets, came about largely through the sale of government bond futures.

Most of the M&G Optimal Income Fund’s duration exposure is focussed on the UK, where Woolnough forecasts the economy will remain weak in 2011, with a stagnant housing market, high unemployment and fiscal austerity weighing on growth. The fund’s duration exposure in pound sterling is 3.4 years, while its duration exposure in US dollars is -0.2 years.

Pioneer Investments has launched an emerging-market corporate bond fund. Pioneer Funds – Emerging Markets Corporate Bonds 2016 matures in five years’ time and pays out an annual coupon. It is managed by Greg Saichin, Pioneer’s Head of Emerging-Market and High-Yield Bonds, and will be 100% invested in corporate debt, around a quarter of which will be investment grade bonds. The fund expects to generate a gross annual coupon rate of approximately 7% and is open to subscribers until June 3.

Schroders has renamed its AS Gold and Metals fund and changed its strategy. The fund is now called the Schroder AS Gold and Precious Metals fund and whereas it formerly invested in a universe of 24 metals, it will now aim to be 50%-100% invested in gold, with the option of holding up to 50% in gold equities and the ability to invest up to 33% in other precious metals such as silver and platinum. As such, the fund can invest futures, swaps, physically-backed ETFs and equities, as well as buying physical comodity, and will be benchmarked against the NYSE Gold Bugs Index that is comprised of the gold spot price (75%) and gold equities (25%). Manager Paula Bujia can also hold up to 33% in cash.

Assets Under Management
Aberdeen Asset Management’s (ADN) assets under management came in at £181.2 billion at the end of the first half period (March 31), an increase of 6% compared to the previous year’s £170.9 billion. CEO Martin Gilbert said demand for the company’s Asia Pacific, emerging market and global equities products has remained strong.

F&C Asset Management’s (FCAM) assets under management ticked up to £106.1 billion at the end of the first quarter—a marginal increase on the £105.8 billion under management at the end of last year.

Henderson Global Investors' (HGG) assets under management fell £1.2 billion in the first quarter of 2011 to £60.5 billion, hit by the transfer of £1.5 billion-worth of cash funds to Deutsche Bank’s DB Advisor. Stripping out the effect of Henderson’s recent Gartmore acquisition, pro-forma assets under management totalled £76.2 billion at the end of March.

Schroders’ (SDR) assets under management at the end of March stood at £185 billion, up 2.5% over the quarter versus the £180.5 billion recorded at the end of 2010. Net inflows totalled £3.0 billion over the first quarter, comprising £2.8 billion in Institutional and £0.2 billion in Intermediary.

Industry Acquisitions
JO Hambro Capital Management has acquired Silver Metis Capital Management and plans to launch two Asian equity funds in the retail space towards the end of the summer. The Singapore-based boutique was founded in 2007 by Samir Mehta, who will join JOHCM as a fund manager based in Singapore, as will his colleague Cho-Yu Kooi.

JOHCM plans to launch a small-cap and a multi-cap fund, both of which will be managed by the duo and will invest in Asia ex-Japan equity.

Julius Baer has bought a 30% stake in São Paulo-based wealth manager GPS. With around $5 billion in assets under management, GPS is Brazil’s largest independent asset manager.

April 26-28

Manager Moves
LV= Asset Management’s Head of European Equities, Mark Page, and fellow team member Laurent Millet are to leave the firm. Following the news, fund analysts at OBSR, a Morningstar company, have removed the LV=Europe ex-UK fund from the OBSR Fund Ratings Service. The fund, formerly co-managed by Page and Millet, previously held an A Rating. In the interim, Richard Falle, remaining co-manager, will assume full responsibility for the fund with the support of Piers Hillier, LVAM’s Chief Investment Officer, while LVAM look to make new additions to the European team. Our analysts will meet Falle and the new team in due course.

New Launches
Allianz Global Investors is to ‘launch’ the Allianz RCM UK Absolute Return fund by converting its RCM UK Growth fund into an absolute return product. Pending shareholder approval, the new fund will continue to be managed by the Chief Investment Officer of UK Equities at RCM, Jeremy Thomas, but will now target returns greater than cash or bonds with less volatility than equities. The fund will be made up of a strategic long portfolio and a market neutral portfolio, with stock selection typically based on a two to three year time horizon.

PIMCO has launched two new actively managed funds as part of the firm’s build out of its global equities platform. The PIMCO GIS EqS Emerging Markets fund will be managed by Masha Gordon, an Executive Vice President and Portfolio Manager in PIMCO’s London office who heads the firm’s emerging markets equity portfolio management team. The PIMCO GIS Emerging Multi-Asset fund will be run under the lead management of Curtis Mewbourne, Managing Director and Head of Portfolio Management in PIMCO's New York office.

April 18-21

New Launches
Thames River is to launch a global emerging markets absolute return fund for Kristof Bulkai and Hugo Rogers, managers of its Water & Agriculture AR fund and Isis fund. The UCITS III fund will launch on June 1 and is domiciled in Dublin. It will aim for annual returns net of fees in the high teens. In combination with the launch, Bulkai and Roger will join the F&C emerging equities team, which is managed by Jeff Chowdhry. The fund requires a minimum investment of £10,000 and carries an annual management charge of 1.75%, plus a 15% performance fee for returns in excess of Libor plus 2%, with a high water mark.

PIMCO has launched the PIMCO GIS Euro Income Bond fund, which aims to surpass other income-generating investments like government bonds, certificates, cash and equity funds on a risk-adjusted basis, while also minimising risk in a low yielding environment. The fund is managed by Luke Spajic, Executive Vice President and Head of Pan-European Credit Portfolio Management. The fund targets an annual income distribution of 5%, distributed monthly, and will maintain an average duration ranging from 1-8 years.

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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Holly Cook

Holly Cook  is Manager, Morningstar EMEA Websites