Standard Life Investment’s Bambos Hambi has swapped two highly regarded funds for rival offerings in his multimanager range after both were rocked by star manager departures.
Hambi runs £5.2bn across his six multimanager ranges, which includes the Standard Life Investments MyFolio Multi Manager and Standard Life Investments MyFolio Managed lines of products. All his funds are risk-targeted and sit in the IMA Unclassified sector.
In his latest investor update, the manager explained that there has been no change in the funds’ asset allocation over recent months and the bias to developed market equities has been maintained as he believes improving global growth will start to be reflected in corporate earnings.
Performance of fund over 3yrs
Source: FE Analytics
However, Hambi has shifted around how he is taking exposure to this asset class in his MyFolio Multi Manager range, given recent changes that have taken place in the asset management world.
One of the funds the manager has sold is Schroder UK Opportunities, which was hit by the departure of manager Julie Dean (pictured) at the start of September. Hambi exited his remaining position in the fund immediately when it broke that Dean had quit Schroders.
He had already sold between 60 and 70 per cent of his position in the fund owing to concerns about its size. “We moved most of our money away from Schroder UK Opportunities earlier in the year. When we first invested in Julie Dean the fund was around £300m in size and we got very concerned at £1.5bn. The fund grew to £3.2bn, started underperforming … and that was it,” he added.
Schroder UK Opportunities, which was called Cazenove UK Opportunities until Schroders bought Cazenove Capital last year, has an impressive long-term track record and sits in the IMA UK All Companies sector’s first quartile over three, five and ten years.
However, performance has taken a turn of the worse in 2014 with the fund dropping into the fourth quartile over one year. Investors had expressed concern about its growing size but assets have fallen back to around the £1bn.
The fund’s new manager, Matt Hudson, worked alongside Dean at Cazenove and Schroders, employing the same business cycle process to his Schroder UK Alpha Income. This also has a good long-term record but has seen performance dip over more recent time frames.
Hambi used the cash freed up from Schroder UK Opps to start a position in the £2.8bn Majedie UK Equity fund, which is managed by Adam Parker, Chris Field, James de Uphaugh, Matthew Smith and Richard Staveley.
The five FE Crown-rated fund is split in four sub-portfolios: three large-cap focused ones of 30 per cent each that invest with value, growth and pragmatic approaches while the remaining 10 per cent is dedicated to small-caps.
Hambi says Majedie UK Equity had been on his “reserve list” for some time. He added: “It’s a fund that’s a little bit different - it has different pots of money allocated to different managers.”
“It’s a fund that we’ve known for some time and have met the team three times in the last nine months, spending hours with them understanding exactly the way they manage money.”
The fund has returned 190.29 per cent over the past 10 years, outperforming both the average fund in the IMA UK All Companies sector and its FTSE All Share benchmark by more than 80 percentage points, as the below graph shows.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
What’s more, it has performed well in a variety of market conditions, losing significantly less than the index and peer group in the down years of 2008 and 2011 while keeping up with markets when they are rising.
It’s done this with less volatility and maximum drawdown than the All Share and its average rival.
Majedie UK Equity has a clean ongoing charges figure (OCF) of 0.77 per cent. Schroder UK Opportunities has a clean OCF of 0.91 per cent.
Hambi has also started a position in the new Artemis US Select fund, which was launched in September by Cormac Weldon.
Weldon joined Artemis earlier in 2014 from Threadneedle, taking six of his team with him. The manager had been with Threadneedle for almost 17 years and ran the Threadneedle American Select, Threadneedle American and Threadneedle American Smaller Companies funds.
Hambi sold out of his Threadneedle holding when Weldon’s departure was announced in January and parked the money in Vanguard US Equity tracker until a decision could be made what to do with it.
“One option for us was to follow the team and we also did quite a bit of work on the existing funds out there on our reserve list. In the end we decided we were going to follow the team to Artemis,” he said.
“The philosophy is exactly the same and we’d been invested in [Weldon] for a number of years. We know the performance from the previous track record … they’re one of the best teams out there in terms of delivering.”
Performance of manager vs sector over 10yrs
Source: FE Analytics
Artemis US Select aims for long-term capital growth through a concentrated portfolio of the US equity team’s “best ideas”. It holds between 40 and 60 stocks and has a multi-cap approach.
Although the fund is benchmarked against the S&P 500, the manager expects it to bear little relation to the index thanks to its high alpha mandate.
Hambi invested on the day of the fund’s launch and says at one point he owned closed to 100 per cent, although this has seen been diluted as new investors buy into the portfolio.
Artemis US Select has an estimated OCF of 0.95 per cent, according to Artemis.
