This week saw the first full Conservative Budget since 1996, in which the chancellor unveiled a series of headline-grabbing measures – including the suggestion that the pensions system could be heading for another overhaul.
There was also the usual fund manager hires and departures taking place this week, as well as research looking at the evolution of the asset management industry. We’ve rounded up a selection of the most important stories of the week below.
Osborne unveils first Conservative Budget
Chancellor George Osborne presented the first Conservative Budget in 19 years this week, unveiling key policy changes to inheritance tax, non-doms, buy-to-let, pension relief, corporation tax and the welfare state.
Although all jostled for headline space, the government’s green paper on pensions tax relief was one of the standpoint points. Osborne suggested that pensions could taxed more like ISAs, with the saver paying tax when they put in money but not when they come to take it out.
David Dalton-Brown, director-general of TISA, said: “Whilst we welcome the government’s continued focus on long-term saving and investing, it’s crucial that the means to do so is made as simple as possible.”
“The prospect of pensions and ISAs being treated the same way and making the transfer of pensions smoother and quicker is excellent news for long-term savers. Indeed, it is something we have been seeking to achieve for some time.”
FE Trustnet took a closer look at the government’s proposals and what they mean for investors in a news analysis earlier in the week.
Riddell leaves M&G after 12 years
Fixed income manager Mike Riddell has left M&G Investments to pursue another opportunity after 12 years at the asset management house.
Riddell managed the £376m M&G Index Linked Bond, £703m M&G Gilt and Fixed Interest Income and £34m M&G Global Government Bond funds, but responsibility for these will now be split between the firm’s 21-strong retail fixed interest team.
Ben Lord will run M&G Index Linked Bond, Matthew Russell will manage M&G Global Government Bond and Claudia Calich will helm M&G Global Government Bond. Calich also took over management of Riddell’s s M&G Emerging Markets Bond fund at the end of 2013.
Over the eight years of the past market cycle, Riddell has outperformed his peer group composite with a total return of 30.73 per cent against 27.30 per cent.
Performance of manager vs peers over 8yrs
Source: FE Analytics
UK retail fund fees drop 10% in 2014
New research by Boston Consulting Group has revealed that retail fund fees in the UK dropped by around 10 per cent over the course of last year as the downward pressure on fund manager charges continues.
The annual report, which covers the global asset management industry, says the average retail fund fee stood at 60.7 basis points last year, down from 54.6 basis points in 2013. Institutional fees, on the other hand, remained at an average of 17.7 basis points.
Boston Consulting Group said: “In the retail segment, channel consolidation resulting in more aggressive posture by intermediaries – particularly in the US – and regulatory measures that bring increased transparency are both driving fees lower.”
The report also stated that global assets under management (AUM) reached a record $74trn in 2014, with the growth being driven by a rebound of inflows in Europe – although the UK and France were highlighted for their “weak performance”.
But the split of assets between different types of fund continues to change: “The product shift of recent years—from traditional actively managed products to passives, solutions, and specialties—held true in 2014, although the move toward specialties slowed.”
“The AUM of traditional active products represented 39 per cent of AUM at the end of 2014 compared with 59 per cent in 2003, while alternatives grew from 6 per cent to 11 per cent, passive products from 8 per cent to 14 per cent, solutions from 6 per cent to 13 per cent and specialties from 21 per cent to 24 per cent.”
“This ongoing shift reflects investors’ persistent hunt for more outcome-oriented products, greater portfolio diversification and less-expensive products in core categories.”
Manager trio joins L&G UK Property
Legal & General Investment Management’s real estate division has hired three managers to work on the L&G UK Property fund, after the portfolio grew to £2.1bn on the back strong investor demand.
Alex Waterworth joins as senior asset manager after 10 years at JLL, Andrew Mercer as a senior asset manager from Capita and Peter McNamara as an asset manager from Colliers. They will work alongside FE Alpha Manager Michael Barrie and Matt Jarvis on the portfolio.
Barrie, head of fund management at Legal & General Property, said: “This hat-trick of hires demonstrates the continued growth trajectory of the property business and the attractiveness of L&G more broadly. What’s driving these appointments is the success of our UK Property fund, which surpassed £2bn in late April.”
FE Analytics shows the fund is one of the most popular members of the IA Property, taking in more than £550m in fresh money over the past year. Only Henderson UK Property and M&G Property Portfolio have witnessed higher inflows.
Performance of fund vs sectors over 8yrs
Source: FE Analytics
Barclays sacks chief exec Antony Jenkins
Antony Jenkins has stepped down as chief executive of Barclays after the board called a change in leadership and a “new set of skills” at the top.
Jenkins has been Barclays' chief executive since 2012, steering the bank through periods such as the aftermath of the financial crisis and a management shake-up that took place around three years ago. He took over after Bob Diamond resigned in the wake of the Libor scandal.
He said: “In the summer of 2012, I became group chief executive at a particularly difficult time for Barclays. It is easy to forget just how bad things were three years ago both for our industry and even more so for us.”
“I am very proud of the significant progress we have made since then. Our capital position is much stronger, our business model is more balanced, we are much more disciplined on cost management, we have made good progress in rebuilding our reputation and we are seen as a leader in the application of technology to our business.”
Barclays chairman John McFarlane has been named executive chairman until the bank appoints a new chief executive.
