News that inflation as measured by the consumer prices index has fallen to 0 per cent has sparked debate whether the UK is experienced ‘good’ or ‘bad’ disinflation and adds to other worries such as the uncertain general election and tension in the eurozone.
But more than this has happened in the funds industry this week. Below are five news stories that stand out from the past week.
UK fund sales slump
Figures published by the Investment Association this week show that funds’ net retail sales amounted to £845m in February, down from £1.8bn one year earlier.
Equity funds saw a net retail outflow for a second consecutive month as investors pulled back from funds in the IA UK All Companies, UK Smaller Companies and North America sectors.
Meanwhile, IA Property became the month’s best selling peer group with net retail inflows of £304m, pushing UK equity income funds into second place with their £248m of sales.
Daniel Godfrey, chief executive of the Investment Association, sad: “Investors reduced their holdings of UK and North American equity funds in February in favour of global, European and Japanese equity funds.”
Monks Investment Trust manager switch
Charles Plowden has replaced Gerald Smith as manager of the £1bn Monks Investment Trust, following a review of the closed-ended fund’s performance and portfolio management arrangements.
Plowden will be supported by Spencer Adair and Malcolm MacColl as deputies. All three are members of Baillie Gifford’s global alpha equity team, which runs around £20bn for mainly institutional clients.
FE Analytics shows the trust has fallen into the fourth quartile of the AIC’s global sector on a three-year view, with returns of 28.90 per cent.
Performance of trust vs sector and index over 3yrs
Source: FE Analytics
James Ferguson, chairman of Monks, said: “It is now appropriate that changes are made at the portfolio management level in order to improve performance. Baillie Gifford's Global Alpha strategy, headed by Charles Plowden, has a well established process and a strong performance record.”
Smith, who has run the portfolio since 2006, remains as a partner at Baillie Gifford while deputy manager Tom Walsh will work on some of the firm’s other mandates.
Alliance Trust vs Elliott spat rumbles on
Alliance Trust has issued a circular to its shareholders, arguing that activist investor Elliott Advisors requisition to put three directors on its board would allow it to embark on “disruptive actions that are at odds with the interests of other shareholders”.
Elliott, which is the £2.4bn trust’s largest shareholder with a 12 per cent stake, has criticised it for having high internal costs, a lack of corporate governance and performance issues. It believes that Alliance Trust would “benefit from a fresh perspective at its board”.
Performance of trust vs sector and index over 3yrs
Source: FE Analytics
However, Karin Forseke, the trust’s chairman, said in the circular that Elliott’s attempt to get three directors on the board is “the thin end of the wedge”.
She wrote: “Your board believes this is just the thin end of the wedge and they would then pursue disruptive actions, to the detriment of other shareholders, focused on helping them to sell their shareholding quickly.”
Vontobel takes majority stake in TwentyFour
TwentyFour Asset Management has entered into a strategic partnership with Vontobel Asset Management, after Vontobel bought 60 per cent of the company.
TwentyFour’s working partners will retain a 40 per cent stake in the business, adding that they remain “fully committed” to the firm and have long-term lock-ins.
The firm said: “TwentyFour will remain autonomous, run by the partners with full control over day-to-day business decisions. Our investment strategies will continue to be managed by the existing team, retaining the same investment process.”
Vontobel Asset Management is a multi-boutique asset manager that has total assets under management of $47.8bn. TwentyFour specialising in fixed income and runs highly regarded products such as the Monument Bond and Dynamic Bond funds.
JP Morgan cuts Fusion Funds AMC
JP Morgan Asset Management will cut the annual management charge (AMC) on Tony Lanning’s JP Morgan Fusion Funds range next month.
The AMC on the share classes of the five-strong whole-of-market fund of funds range will be lowered by one-third. The A class will move from 1.5 per cent to 1 per cent, the B class from 1 per cent to 0.67 per cent and C class from 0.75 per cent to 0.50 per cent.
Jasper Berens, head of UK funds at JP Morgan Asset Management, said: “We are making this change to improve competiveness of Fusion Funds in the marketplace, which has evolved significantly since we launched the proposition more than two years ago.”
The range launched two years ago and aims for its underlying holdings to have little or no commonality with other UK multi-manager fund offerings.