While the moves at Schroders gained a lot of media attention, some of the other issues have slipped the attention of most investors.
Cazenove UK Smaller Companies/Cazenove UK Opportunities
Richard Buxton’s move from Schroders to Old Mutual is the most high-profile event in fund management of recent weeks.
He announced he was leaving the £3.4bn Schroder UK Alpha Plus fund to run a similar fund for Old Mutual, leaving Schroders in need of a replacement.
Schroders responded by buying all of Cazenove Capital for £424m, meaning it will take over control of the £1.3bn, five crown-rated Cazenove UK Opportunities fund, run by FE Alpha Manager Julie Dean.
FE Alpha Manager Paul Marriage’s £438m Cazenove UK Smaller Companies fund, which has five FE Crowns, will also be taken under Schroders’ wing.
Marriage’s fund is the top performer in its sector over three years, having made 98.41 per cent, more than double the 49.19 per cent of the average fund in the sector.
Dean’s fund is a top-declie performer over three, five and 10 years.
Performance of fund vs sector and benchmark over 3yrs
Source: FE Analytics
Gleeson (pictured) says the merger should not harm the highly rated funds, but he is starting to have concerns about the amount of money Dean and Marriage are running.
"The only point of concern is the size of the Cazenove funds," he said. "They have both received large amounts of new money in recent months and Schroders’ head of equities stated they are near full capacity." "A hard closure is not on the table and the funds are still open to new investors for now but they could soon reach a point where additional inflows would be turned down."
"No action needs to be taken by existing investors. However, in light of the growing size of the Cazenove UK Opportunities and UK Smaller Companies funds, potential investors will want to make their decision regarding whether they will invest soon."
Threadneedle Pan European Smaller Companies
Threadneedle announced in March that it would be soft-closing the Threadneedle Pan European Smaller Companies fund, managed by FE Alpha Manager Philip Dicken.
"The fund has been one of the best performing and most popular funds in its sector over recent years," said Gleeson.
"This popularity has seen assets under management increase substantially, doubling to nearly £1.2bn in the space of a year."
"Threadneedle have confirmed that they believe the fund is reaching capacity and in order to protect the performance they have decided to soft-close it."
Threadneedle has not announced a date for the closure as of yet, but Gleeson is supportive of the move.
"The decision to close the fund to new investors has been taken to protect the performance and we are therefore hopeful that it will continue to perform well," he said.
However, he points out that the move raises questions over the future of the Threadneedle European Smaller Companies fund.
"The fund has seen a large amount of inflows over recent months, meaning that assets under management now stand at just under £1.5bn, compared to less than £1bn a year ago," Gleeson said.
"With Threadneedle recently announcing their intention to soft close their Pan European Smaller Companies fund, which is smaller, we are concerned this fund is also nearing capacity."
"Analysis shows there has been no impact on the fund so far due to liquidity constraints, but we will be discussing the matter further with Threadneedle shortly."
Threadneedle European Smaller Companies was run by FE Alpha Manager David Dudding from 2002 until December of last year.
The two funds sit in the same sector, but the Pan European fund has the freedom to invest in the UK as well as continental Europe.
Despite this it has slightly underperformed over three and five years.
The funds are second and third in the sector over both periods.
Performance of funds vs sector over 3yrs
Source: FE Analytics
Invesco Perpetual Distribution/Invesco Perpetual UK Growth
Two top-performing funds from Invesco seem to have had very different receptions from investors.
While Neil Woodford, Paul Causer and Paul Read’s five crown-rated Invesco Perpetual Distribution fund has seen strong inflows, strong performance is being met with consistent outflows on the Invesco Perpetual UK Growth fund.
Invesco Perpetual Distribution sits in the IMA Mixed Investment 20%-60% Shares sector and is currently yielding 4.95 per cent, according to data from FE Analytics.
"The fund has seen large and continuing inflows during recent months," Gleeson said.
"Over the past year this has resulted in assets under management increasing by around 40 per cent from £1.5bn to over £2.2bn."
"The fund has generated outstanding performance, particularly relative to its sector [IMA Mixed Investment 20%-60% Shares]," he added.
"In 2012, the fund’s ranking was 3rd out of 206 and it has been in the first quartile in every calendar year since 2009. In light of this it is not surprising that the fund’s size has grown to £2.25bn."
"The fixed income part of the fund is largely orientated towards credit issued by financial institutions."
"The fund's performance was positively driven by this allocation and it would not surprise us that, at the end of the year, some investors try to follow the trend."
Gleeson says that he is not concerned about the size right now, but it is something investors should be monitoring.
"Although large, the fund is by no means the largest in its sector, which makes us believe there is still some capacity left."
"Furthermore, although recent inflows have been large in absolute terms, relative to the size of the fund they do not seem so big. We do not believe investors need to take any action for the moment."
In sharp contrast, FE Alpha Manager Martin Walker's £938m Invesco Perpetual UK Growth fund has seen steady outflows despite a strong performance record.
Gleeson points out that it has seen net inflows in only one month since October 2008.
"We are surprised by the amount of outflows exhibited by the fund, particularly in light of its strong performance in both 2011 and 2012," Gleeson continued. "The fund is top quartile over one and three years."
Data from FE Analytics shows that the fund has returned 43.22 per cent over the past three years while the average fund in the sector has made 26.7 per cent, marginally ahead of the FTSE All Share.
Performance of fund vs sector and index over 3yrs
Source: FE Analytics
"With the fund having a large allocation to financials, combined with the equity rally exhibited towards the end of 2012, we were expecting this fund to be popular with investors. This does not appear to have been the case," Gleeson said.
"Currently the fund's size is just over £900m. It is by no means the largest or the smallest fund in the sector."
"It is possible that the manager is trying to limit the fund’s size below £1bn, although he does not appear to have a preference for small or mid cap investments, which would necessitate this."
"For the moment we do not believe these outflows will have an effect on the fund as they are relatively small; this has meant that the performance of the fund has kept the fund’s size relatively stable."