Highlights of the week's news, moves and views in the fund industry.
Industry News
F&C Turns Outflows into Inflows in First Half
F&C Asset Management reported net inflows grew to £800 billion in the first half of 2011 versus net outflows in the year-ago period of £300 billion. Assets under management increased to £108.0 billion in the first six months of the year, a marginal rise compared to the previous year’s £105.8 billion figure. But group revenues reported a more notable increase, up 28% year-on-year to £137 million, thanks in part to its acquisition of boutique Thames River.
Investec Set to Become Major Wealth Management Player
Investec this week confirmed that it is behind a bid for broker Evolution Group, owner of private wealth manager Williams de Broe, which is itself in advanced talks to acquire BNP Paribas Wealth Management . Investec said it has made a preliminary approach in line with its existing strategy. An acquisition of Evolution in 2011, following the purchase of Rensburg Sheppards in 2010, and the accompanying potential purchase of BNP Paribas’ UK wealth management unit, would propel Investec into the spotlight as a major UK wealth manager.
Liontrust Boosts Assets, Team with Occam Acquisition
Liontrust Asset Management is to acquire the fund management business of emerging markets specialist Occam in a move that will boost Liontrust’s UK and European assets under management by £124 million to £1.3 billion. The acquisition will see Liontrust’s Gary West and James Inglis-Jones take on the management of the Occam Europe Focus and Occam Asia Focus funds. Occam’s Asian and emerging markets teams will join Liontrust, as will several emerging markets and Asian equity funds including Occam Emerging Markets Opportunities and Occam Asia Focus.
Schroders Net Inflows Fall as Investors Take Fright
Schroders’ net inflows into its funds slowed in the second quarter to £2 billion from £3.1 billion in the first quarter, as market volatility kept retail investors on the sidelines. Chief Executive Michael Dobson said retail investors are still buying funds but redemptions are higher, making for a net retail inflow of just £400 million in the first half, which compares dramatically to the £5.1 billion net retail inflows recorded in the first half of 2010. Dobson said retail net inflows will likely remain subdued, while institutional net inflows have remained relatively strong, at a net £4.6 billion in the half on gross sales of £13.1 billion. [Read more on this here.]
Vanguard U.K. Goes on Hiring Spree; Watch out for Falling Fees
Vanguard is going on a hiring spree in London and its ongoing expansion here could continue to pressure fees within the U.K. fund industry.
By the end of the year, Vanguard hopes to hire 20-30 new employees in London, many of whom will be investment managers. Already at 80 employees since it opened in 2008, Vanguard's London office has been ramping up its fund offerings. In June, Vanguard brought its LifeStrategy fund series over from the U.S. Thomas Rampulla, managing director with Vanguard International, told Morningstar the firm may launch exchange-traded funds here as well.
The LifeStrategy funds cost less than their rivals do, and that, coupled with the ban on commission payments on fund sales starting in 2013 as a result of the government’s Retail Distribution Review (RDR), should create a competitive advantage for Vanguard's direct-sales model.
Prior to the arrival of the firm in the U.K., rivals charged upwards of 1.2% per year for index funds. Faced now with Vanguard charging less than half that, these firms have been cutting fees. With Vanguard's expanding presence, the pressure may only increase on other firms to continue the trend.
Fund Launches and Closures
ING to Expand Absolute Return Range
ING Investment Management plans to launch two new absolute return funds, one will be a multi-asset total return fund and the other a global tactical asset allocation fund. The move comes in response to significant growth in its absolute return business in recent years, the firm said. The funds will be launched in the coming months.
Isaac’s Departure to Force Closure of Three GLG Funds
GLG Partners’ loss of star managed Gareth Isaac has triggered the closure of three of its fixed income funds. Isaac is set to join Schroders in October, where he will be a senior portfolio manager within its fixed-income multi-sector team working on ‘high-conviction’ mandates. Upon his departure from GLG, the management of GLG's Gilt fund, Core Plus Sterling Bond fund and Total Return Bond fund will pass to Christophe Akel until their closure later in the year. Investors in the three funds, which are to be shut due to their 'sub-scale' size, will be offered the option of switching into alternative funds in GLG’s UK ICVC range without incurring a switching fee.
Manager Moves
Mercer Appoints Credit Suisse Trader
Paul O’Connor, who has spent the last decade working as propriety trader and strategist at Credit Suisse, is to join Mercer as head of asset allocation for its investment business in Europe, the Middle East and Africa. O’Connor will be responsible for the overall asset allocation strategy of Mercer’s client portfolios, with a specific emphasis on adding value through the use of Mercer’s Dynamic Asset Allocation service.
Schroders Nabs Goldman Multi-Disciplinary Hedge Fund Manager
Schroders has appointed Goldman Sachs’ Nicholette MacDonald-Brown as fund manager on the European equities team, where she will join 17 other managers and analysts and report to team head Rory Bateman. MacDonald-Brown was previously a senior investor for the European portfolio and Goldman Sachs Investment Partners.
Williams de Broë Attracts Investment Director from Charles Stanley
Williams de Broë has appointed Elissa Bayer as investment director in its London office. Bayer has been acting as director of private clients at Charles Stanley for the past three years, having previously held a similar role at Insinger de Beaufort. Bayer will join the private wealth manager in October.
