Market News

October: Mergers, Fund Launches and Manager Walk-outs

October 31, 2016

It has been a busy month in the investment industry with a number of new fund launches, two investment houses merging, several fee changes announced – plus the departure of a leading fund manager. These changes may have been in response to shifting fundamentals in the investment industry. New research published this month showed sales of low-cost ETFs have continued to grow, with ‘smart-beta’ ETFs now at record levels.

At the same time the commercial property fund sector continued to move towards business as usual, with several larger funds, including M&G and Henderson, lifting suspensions on withdrawals.

Henderson To Merge with Janus Capital

Henderson Global Investors is to merge with US-based Janus Capital in a £5 billion deal. The deal should enable both parties to expand globally and reduce costs in the face of increased competition from passive funds.

Between them the two asset managers run more than $320 billion globally and the tie up will make the new company the 37th biggest fund manager worldwide.

The company, which will be called Janus Henderson Global Investors, will be run from London, but Henderson will lose its London Stock Exchange listing. The new company will be listed in New York and Australia.

Neptune Manager Resigns

James Hackman, head of US equities for Neptune has resigned after only four months in the role. He has run the top-performing £40 million US Income fund for Neptune since 2014 and has been with the company since 2012.

George Boyd-Bowman, who runs the Neptune Global Income fund, and who was formerly assistant manager on US Income, has taken over as lead manager on this key fund.

Robin Milway has taken on the management of the Neptune US Opportunities fund, which Hackman also ran.

Neptune said: “While we are disappointed that James Hackman has decided to pursue opportunities elsewhere, George Boyd-Bowman has established experience running dividend-growth focused mandates.”

Wave of New Fund Launches

Troy Asset Management announced that its new Trojan Global Income fund will launch on November 1. This fund will be run by James Harries whom the boutique investment house poached from Newton almost a year ago, where he ran their popular and successful Global Income Fund. This latest launch brings to total UCTIS funds run by Troy to seven. This includes their flagship Trojan and Trojan Income funds managed by founder Sebastian Lyon and Francis Brooke.

Franklin Templeton have launched a global currency fund, run by Michael Hasenstab and Sonal Desai. Hasenstab is the executive vice and chief investment officer of the $130 billion Templeton Global Macro Group. Desai, is senior vice president and director of research at the group. The fund will invest predominately in securities and instruments offering long or short exposure to currencies of any country, including developed and developing markets.

Meanwhile Rathbones have launched an Income and Growth fund for charities. The funds will be managed by Rathbones’ head of investments, Andrew Pitt. The fund has been specifically structured for charities with the aim of delivering long-term capital growth and income while employing a total return approach. It will also avoid investing in tobacco companies or firms that derive more than 10% of their revenue from alcohol, armaments, high interest lending, gambling or pornography.

Woodford Launches Offshore Fund

Woodford Investment Management has launched a new offshore feeder fund this month, giving overseas investors the opportunity to access the Woodford Equity Income Fund, one of the UK’s most popular funds.

This fund is domiciled in Ireland. Investors have the option of investing in sterling, euros or dollars, and there will be options to purchase hedged or unhedged share classes. Craig Newman, chief executive at Woodford, said: “Launching an offshore feeder fund is a natural extension to our fund range.”

Asset Managers Cut Fund Fees

A number of managers have reduced the fees on selected funds. M&G is reducing both annual and ongoing fees on its £414 million Extra Income Fund, which will be renamed as the M&G Income Distribution Fund from December 16, when this new charging structure comes into effect.

From this date the annual management fee will but cut from 0.75% to 0.6%, while ongoing charges will be cut from 0.91% to 0.76%.

Kames is also lowering the AMC on its UK Equity Income fund by a similar margin. This charge will fall to 0.6%, from 0.75% a year, from November 1.

Meanwhile Finsbury Growth & Income Trust (FGT) has announced it will tier fees. The trust currently has £963 million assets under management. Once these exceed £1 billion the annual charge will reduce from 0.6% to 0.54%. If assets under management fall back to under £1 billion, then the charge will revert to 0.6%.

Source: Morningstar. Emma Simon | 31/10/2016

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