Longevity in a fund manager is widely seen as good thing as it is usually a marker of talent and experience to deal with differing market conditions. 
Therefore, when a long-serving manager leaves a fund, it does present a lot of head scratching for its investors as there is always the concern that it may, under new leadership, no longer be the portfolio they bought in the first place.
Richard Peirson (pictured) has managed the £1bn AXA Framlington Managed Balanced fund for more than 20 years but is relinquishing responsibility for both fixed income and equity selection but will still make asset allocation decisions.
Jamie Hooper is now co-manager and in charge of equities and Nick Hayes will have the responsibility for the fixed income portion of the fund, both roles previously headed by Pierson.
This announcement has already led Hargreaves Lansdown to remove the fund from the ‘Wealth 150’ list, causing investors to question whether now is the time to look for other alternatives in the mixed asset space.
On top of that, Square Mile have downgraded their rating of the fund from ‘AA’ to ‘A’, although they say an expected continuation of the investment approach Peirson has used in his 22 years on the fund is enough to keep it on their recommended list.
“The changes to the fund’s management structure have been reflected through the movement of the rating. However, we believe that both Hooper and Hayes are capable fund managers in their own right,” Square Mile said.
According to FE Analytics, since 1993 Pierson took over the fund it has returned 520.73 per cent beating all other portfolios with track records long enough in the IA Mixed Investment 40%-85% Shares as well as the highest return out of any mixed asset portfolio in the whole IA universe.
Performance of fund and sector since 1993
Source: FE Analytics
This also beats the return of the FTSE All Share by 80 percentage points with a level of volatility significantly lower. However the portfolio has actually been more volatile than its sector average over the past 10 years.
Peirson has traditionally blended equites with government bonds, some higher quality credit and cash to dampen volatility but has also tactically used cash when valuations have called for it. This has worked well in some of the worst times for markets.
He protected better against the downside than his sector peers in 2008 and 2011, but also managed to outperform in the bull runs of 2009, 2010, 2012 and 2013. In all four of these years, the fund delivered double digit returns and the latter three years it was top quartile.
However, recent performance has been more mixed and the fund suffered its worst relative performance in 2014 for at least 10 years, finishing bottom quartile in the sector. This year the portfolio is – just behind the FTSE All Share’s gain.
Performance of fund, sector and index since 1 January 2014
Source: FE Analytics
City Financial’s investment director Peter Toogood is still backing following the changes to the fund but is expecting a shift in the how the fixed income portion of the portfolio is managed.
“Given a renewed focus on this portion of the fund from a fixed income specialist, we expect its composition to alter over time, but to continue to fulfil its primary function as a risk offset against the equity allocation, as well as generating an income,” he said.
“Given our knowledge of all the underlying managers involved in this mixed fund and the importance placed upon meeting the expectations of its typically more conservative client base, we are retaining the fund on our recommended list.”
Meera Hearnden, fund analyst at Parmenion also says she recommends the fund as a ‘buy’, believing the changes are positive.
“This hardly comes as a surprise as it was bound to happen at some point. That is why they already had succession planning in place over the last few years with Jamie Hooper. He has been doing well on his own right so he is clearly the right man for the job.”
“Additionally, the fund benefits from the stock picking skills of other members of the AXA Framlington regional teams so I don't envisage any wholesale changes. I would be inclined to give Jamie Hooper the benefit of the doubt and feel the fund can continue from strength to strength going forward.”
Peirson said: “Jamie has enjoyed significant success running the AXA Framlington UK Growth fund since 2006. He has also been a member of the Managed Balanced team for the past three years and in total we have worked together on the UK desk for nine years now. This is the natural next step for the Fund as Jamie will eventually take the reins as lead manager."
"Regarding the fixed income portion, I recognise that it makes sense to have a specialist managing this, in the same way that it does with overseas equities. I am confident that these changes will ensure the Fund continues to deliver the solid risk adjusted performance our clients have come to expect,” he added.
Charles Stanley Direct’s Rob Morgan is not considering selling the fund as he thinks any alterations in strategy will be minimal and slowly implemented.
“I am pretty relaxed on this news so its ‘hold’ for me. This is a further step in a transition to Jamie Hooper that has been underway for some time, and in my view it has been good succession planning.”
“The fund is unlikely to undergo any drastic changes under the new management with overseas equity investments continuing to be managed by AXA Framlington’s regional equity specialists. Jaime Hooper is part of the same UK desk and there will be considerable overlap between his own fund and the UK portion of this one.”
AXA Framlington Managed Balanced has a clean ongoing charges figure of 0.7 per cent.
