The UK’s largest financial advice firm St James’s Place (SJP) has appointed a set of new managers to join the existing teams running its Global Growth and Emerging Market Equity funds.
Axiom Investors, WCM Investment Management and Artisan Partners will join Edgepoint and Sands Capital in running the £1.9bn Global Growth, which increased 38.3% since its launch in 2017 but failed to beat the MSCI ACWI benchmark.
It will also be changing from a fund of fund structure to being directly invested in equities from 25 July.
It was not the only fund to have a shake up, with the Emerging Market Equity portfolio also getting a new set up. Lazard Asset Management, ARGA Investment Management and Somerset Capital Management have been added alongside existing fund management group Wasatch Advisors.
The fund has climbed 91.6% since it went live in 2014, beating the MSCI Emerging Market index by 23.4 percentage points, making the decision an interesting one.
Total return of fund since launch
Source: FE Analytics
Darius McDermott, managing director of Chelsea Financial Services said that St James’s Place had “learnt some lessons” from its partnership with former star fund manager Neil Woodford, who ran its UK High Income, UK Equity, and UK Income Distribution funds.
He was removed as manager of these portfolios just after the Woodford Equity Income fund was forced to close, leaving many investors out of pocket.
Woodford Investment Management’s portfolios went to the wall when investors attempted to withdraw their cash in huge swathes. The funds had a large amount of money in illiquid, hard to trade unlisted and very small companies, which made meeting these redemptions difficult.
Shortly after the suspension of his flagship Equity Income fund, SJP removed the disgraced fund manager from their own portfolios, which he had run, but had not been allowed to invest in such illiquid assets.
McDermott suggested that SJP’s transition to a multi-manager structure in these portfolios was as an early prevention measure, noting that it would no longer mean they were beholden to one name. He said it also added more accountability on how funds are run.
He said: “They are moving to a multi-manager rather than a single manager strategy and what happened with Woodford will have had an impact on that thinking for sure.”
Although this structure lessens the risk of mismanagement, some could argue that having multiple managers on a fund damages the chance for outperformance.
The more diversification that a fund has, the more likely it is to revert back to the performance of a benchmark index. This is known occasionally as diworsification.
McDermott added: “If, in aggregate, your multi-managers outperform then your investors will get a good return but what if, in aggregate, your managers underperform? The one thing I'm sure is the process for picking those managers would have been detailed and robust.”