With Daniel Godfrey stepping down as chief executive of the Investment Association, much of the week’s media coverage has been dedicated to what this means for the trade body and the wider industry, but there’s been the usual round of hires, fund launches and macro news as well.
To save you from having to look over a week’s worth of asset management news, FE Trustnet has rounded up the biggest stories of the week for you to read in one handy package.
Godfrey quits as chief of Investment Association
Investment Association chief executive Daniel Godfrey stepped down from his post this week after speculation mounted that a number of the industry’s biggest names are set to let their membership expire.
Sky News reported that M&G Investments and Schroders would be departing the trade body and said Fidelity Investments, Aberdeen Asset Management and Invesco Perpetual are also considered leaving.
None of the groups commented on the speculation, but sources suggest some have become dissatisfied with the divergence between their views and the trade body on a number of key industry issues.
However, Godfrey – who joined the trade body in 2012 and drove its Statement of Principles and transparent costs efforts – later left the Investment Association by mutual agreement following a meeting with chair Helena Morrissey.
Morrissey said: “The board would like to thank Daniel for his significant contribution to the Investment Association. During his time Daniel has driven a number of important initiatives, including the transformative merger with ABI Investment Affairs.”
“His commitment and passion for our industry is widely admired by all those who have worked with him. We owe him a great debt of gratitude and wish him the very best for the future.”
Guy Sears, currently the association’s director of risk, compliance and legal, will take on the role of interim chief executive until a permanent replacement is appointed.
Small-cap manager Banyard to depart Schroders
Rosemary Banyard, co-head of pan-European small and mid-cap companies at Schroders, is to leave the group after more than 17 years.
Banyard is co-manager on the Schroder UK Smaller Companies and Schroder UK Mid Cap funds, which she works on alongside FE Alpha Manager Andy Brough. She will leave the firm on 31 March 2016 to “pursue new opportunities”.
Brough will become sole head of the pan-European small companies and mid-cap team, as well as sole manager of Schroder UK Smaller Companies. Iain Staples, co-manager of Schroder Institutional UK Smaller Companies, will take on additional co-manager responsibilities for some of the team’s segregated mandates.
Schroders has also hired Jean Roche from Hargreave Hale, who will join the team in January 2016.
Brough said: “Over the last 17 years, Rosemary and I have built a successful franchise which emphasises a team based approach. I am delighted Jean is joining and that Iain is taking on additional responsibilities. I wish Rosemary well for the future. I am confident we will continue to deliver the strong investment performance our clients expect.”
Performance of manager vs peer group composite over 10yrs
Source: FE Analytics
Fitch warns on bond fund capacity
Credit ratings agency Fitch has warned that many large bond funds have yet to be tested by a period of severe stress, while arguing that capacity constraints within the space are “growing”.
The group’s ‘Fund Capacity: Trade Off Between Size and Performance’ report pointed out that fund size is only one element of capacity, noting that asset class, investment strategy, investor base and liquidity also play their parts.
It also noted that large funds seem to have maintained their performance as assets under management grow, suggesting many have not yet reached maximum capacity, but adds that they have yet to go through “adverse market conditions with sustained, extreme outflows”.
“It remains to be seen how large funds would behave in longer periods of sustained, extreme outflows, particularly in the fixed income category where redemption risk is building,” the ratings agency said.
“Most of the large flagship funds’ safeguards against fire sales are untested in such an adverse market regime.”
Impax launches fund after OMGI pulls mandate
Specialist environment investment manager Impax has announced the launch of the Impax Leaders fund after it lost a sub-adviser mandate with Old Mutual Global Investors (OMGI).
Impax’s Leaders strategy was launched in March 2008 and until now was only available in the UK through the Old Mutual Ethical fund, which the firm looked after.
However, OMGI has switched the investment adviser of the £77m fund to Quilter Cheviot, which was recently acquired by Old Mutual. This prompted Impax to announce a standalone vehicle.
Headed by Hubert Aarts, the Impax Leaders fund will be a long-only, all-cap global equity portfolio focused on resource efficiency and environmental markets. It has no exposure to fossil fuels and 65 per cent of revenues of the investee companies are directly related to positive environmental solution providers.
Bruce Jenkyn-Jones, head of listed equities at Impax, said: “Our Leaders strategy was established in March 2008 and has grown to some £600m AUM in continental European and US markets. We look forward to adding a product based on this strategy to our offering to UK investors at a time when we are seeing unprecedented interest in environmental investment strategies.”
Since Impax took over Old Mutual Ethical in October 2010, it has posted a 47.62 per cent total return while its average peer in the IA Global sector has made 52.42 per cent.
Performance of fund vs sector over manager tenure
Source: FE Analytics
IMF warns on global growth
The International Monetary Fund (IMF) has warned that the global economy will grow at its slowest pace since the global financial crisis this year as slowing emerging markets mask the recovery in the developed world.
In the group’s twice yearly world economic outlook, the Washington-based organisation said the global economy will grow by 3.2 per cent over the course of 2105 – a 20 basis point downward revision on its forecast earlier in the year.
Although the IMF said there was not a single cause for the economic weakness, the fund said the outlook for emerging markets is “generally weakening” because of issues such as the Chinese slowdown, difficulties for countries reliant on commodity exports and the aftermath of investment and credit booms.
Maurice Obstfeld, the IMF’s economic counsellor and director of the research department, said: “Six years after the world economy emerged from its broadest and deepest post-war recession, the holy grail of robust and synchronised global expansion remains elusive.”
“Despite considerable differences in country-specific outlooks, the new forecasts mark down expected near-term growth marginally but nearly across the board. Moreover, downside risks to the world economy appear more pronounced than they did just a few months ago.”
