European stars set to cross the channelHSBC Investments to ...
Transcript of European stars set to cross the channelHSBC Investments to ...
by Alan O’Sullivan
UK fund selectors are still unableto access the skills of six ofEurope’s top 10 fund managers,but a fresh initiative byScandinavian groups is set tochange this situation.
Exclusive research by CitywireFund Manager Internationalmagazine reveals that whileBritain is still being deprived ofthe best continental managers,plans are afoot among topEuropean boutiques togain distributor status.
Fund ManagerInternational hasranked Europe’s Top100 Fund Managersbased on risk-adjustedperformance over thethree years to the endof 2006.
Europe’s top fund
manager, Gonzalo Lardiés,remains inaccessible to UKinvestors following his movefrom Metagestión to BanquePrivée de Rothschild Europe thismonth. The AAA-rated Spanishmanager gained the statusmanaging Metavalor, a Spanishequities fund.
Oslo-based boutique OdinForvaltning’s Lars Mohagenclaimed second place, with hisOdin Offshore fund.
Although this fundremains unavailable toUK investors, the groupis moving to launchmirror funds that will beUK-registered.
The group is planningto move into the UKwithin a year with fourregistered funds,including three which
invest in the Nordic region andthe Odin Europa fund.
The third best Europeanmanager, Filip Weintraub fromSwedish boutique StavangerFondsforvaltning, will also see his€3 billion Skagen Global fundregistered in the UK, once a pushinto continental Europe has beencompleted.
Other managers who featurein the top 10 and remain inacces-sible to UK investors includePeter Puehringer and ChristianHirschmann, managers of theZZ1 fund from ZZVermoegensverwaltung.
Keppler Asset Management’sDidier Rosenfeld is the onlyEuropean manager in the top 10who is currently available in theUK with his Global AdvantageFunds Major Markets HighValue fund.
www.citywire.co.uk 12 April 2007
by Charlie Parker
This week Citywire revealed the move of threeinvestment trust mandates from CloseInvestments to the newly formed Frostrow Capitalboutique. The change seems to have beenwelcomed by Close and is indicative of importantchanges taking place.
Firstly, it will probably mark the end of thehistoric Finsbury brand. The original FinsburyTrust, which later became Hansa Trust,spawned the Finsbury Growth & Income,Finsbury Emerging Biotechnology and FinsburyWorldwide Pharmaceutical trusts which left thefirm this week.
Now the Close Finsbury boutique has been
gobbled up by Close Investments, the firm isbelieved to be close to dropping the Finsburyname from its Oeic range. It seems unlikely thatformer Close Finsbury managing directorAlastair Smith will encourage the trusts to retainthe name in their new home with him atFrostrow Capital.
The change also shows that the firm has finallystarted aggressively focusing its business. It hasbeen running small funds with some of the highesttotal expense ratios (TERs) in the industry and thisclearly could not continue.
Close Investments deputy managing directorStuart Alexander said: ‘Organic growth is just notan option with equity funds.’
HSBC Investmentsto reopen Bric fund
An ease in capacity concerns has
encouraged HSBC Investments to
reopen its giant Bric (Brazil, Russia,
India and China) fund to the retail
market, writes Dylan Lobo.
The $2.7 billion (£1.4 billion)
HSBC GIF BRIC Freestyle fund is
run by Nick Timberlake and his
team from HSBC Halbis Partners,
the fundamental active arm of
HSBC Investments.
The fund hard-closed in June
2006 due to concerns that capacity
issues would affect performance.
However, the group has decided to
reopen the fund on the back of
growth in the markets it invests in
over the last few months.
HSBC Investments head of
emerging markets business,
Christian Deseglise, said: ‘Over
the past eight months, the markets
in which this fund invests have
grown in size and liquidity and
depth has improved. This has
increased capacity to a level
whereby it is now appropriate to
reopen the fund.
‘We will continue to watch the
capacity issues closely and are fully
prepared to close the fund again to
protect the interests of clients.’
Deseglise is confident on the
prospects for Bric countries
against the backdrop of supportive
global growth and liquidity, along
with buoyant macro-conditions in
Bric markets.
He also pointed out valuations
remain attractive and domestic
demand in the Bric economies is
growing, which provides solid
support for many equity sectors.
Small-caps prove best at
beating volatility – p3
Richards retreats from
Société Générale – p4
Resolution’s Clark
challenges Nimmo – p6
European stars set to cross the channel
Winners of theIMA Team Awardfor Excellence in
Investment Writing2005 and 2006
First for fund manager performance, news and analysisFirst for fund manager performance, news and analysisNº 162
Close moves out of investment trustsFrontRunnerFrontRunner
Lardiés: unavailable in the UK
Neptune European Opportunities Fund has been the top performer in its sector 3 years running.
Source: Lipper Hindsight, Europe ex UK sector, bid to bid,net income reinvested
* Cumulative performance since launch 29/11/02 to 28/02/07
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% Annual returns to 28 February 2007 2006 2005 2004
Sector Average 12.0 30.0 15.6 37.5
Neptune European Opps 23.5 51.5 30.7 37.5
Position in sector 1 / 103 1 / 98 1 / 95 43 / 88
Since launch*
99.7
212.6
1 / 86
Neptune European Opportunities Fund
N-CitywireFund-April.indd 1 22/3/07 12:13:34 pm
by Dylan Lobo
During the first quarter of the 12months to April 2007, SmallerCompanies managers weatheredvolatility in the markets betterthan their large-cap rivals.
Despite the growingconsensus that large-cap stockslook cheap, funds focused on themarket did not handle themarket falls as well as small-capmandates.
An average return of 9.54%for European SmallerCompanies managers made itthe best performing sector in thefirst three months of theyear. Philip Dicken wasthe top performer in thesector, thanks to areturn of 14.4% on hisThreadneedle PanEuropean SmallerCompanies fund.
Meanwhile, theUK SmallerCompanies sectordelivered the
second best average at 5.5%.Paul Jourdan, who will be takinghis fund across to Noble FundManagers when he joins thefirm from First State in thesummer, was the bestperformer, returning 12.8% onhis First State British SmallerCompanies fund.
Elsewhere, the rise of Europeshowed no sign of dwindling onthe back of a recent report fromThomson Financial, whichshowed European stockmarketsare worth more than the USmarket for the first time since
the First World War. The European excluding
UK sector put in the thirdbest performance with anaverage return of 4.72%.
The sector also containedthe UK’s best overall
performing fund in the firstquarter, Willem Vinke’sJOHCM ContinentalSelect Values fund,which returned 16.6%.
Another winning sector wasUK All Companies with anaverage return of 2.8%. DaltonStrategic Partnership’s Glen Pratttopped the sector with a returnof 11.3% on his Melchior UKOpportunities fund.
Unicorn Asset Managementinvestment director JohnMcClure took the plaudits in theUK Equity Income sector,thanks to a 6.54% return on hisUnicorn UK Income fund. Thesector ranked 14th overall with a2% average.
Jupiter’s Simon Somervillewas the highlight in anotherwise disappointingmonth for Japan. He headedthe sector with a 4.4% returnon his Japan Income fundversus an average return of alittle more than 1%.
Bond fund managers alsocontinued to struggle. Out ofthe four fixed income sectorsGlobal Bonds delivered the bestaverage return at 1%.
NEWS
Small-caps prove best at beating volatility
by Charlie Parker
Scottish & Newcastle has beentipped as the hottest potentialprivate equity auction of thesummer.
The brewer has seen itsshares shoot up from a price of515p on 13 March to 620p by 7April. Since the rumour millbegan around the firm, whichmakes Fosters beer, some 14%of shares have changed hands.
Citywire understands,however, that M&G Recoverymanager A-rated Tom Dobellhas retained his stake ofaround 5.7 million as he awaitsthe opportunity to catch abreak on the next FTSE 100bid target.
M&G is set to benefit acrossits fund range as the M&GDividend fund managed byRichard Hughes holds around2.25 million shares.
AAA-rated Hughes alsoholds some 1.2 million sharesin the M&G Extra Incomefund. Collectively this givesthe group a stake of close to1% in the firm across its retailrange.
Whether the private equityhawks do eventually swoop onthe brewer or not, M&G canboast significant returns.
The majority of the group’sstake was bought inSeptember 2004 when theshares were trading at around
385p, although Dobell hasbeen adding to the stake asrecently as February.
The firm boasts strongbrand recognition across theglobe owning Fosters,Kronenberg 1664 among itsstable as well as Woodpeckerand Strongbow cider.
Should a merger be on thecards groups such as Carlsbergand Heineken have beentouted. Yet Carlsberg iscontrolled by a charitablefoundation which could createobstacles to a merger.
Either way the ‘no worries’way of life Fosters promiseswill sound sweet to the fundmanagement hands at M&G.
S&N provides a perfect brew for M&G’s fund range
www.citywire.co.uk 3 12 April 2007
Performance Highlights
SEI promise tomake volatility paywith fund launchUK retail investors will soon be able
to access SEI Investments’ quanti-
tative manager of managers (MoM)
fund, which aims to keep a tight
rein on volatility across the world,
writes Dylan Lobo.
The Dublin-domiciled SEI Global
Managed Volatility fund, which was
originally launched last September
for a select range of SEI’s client
base across the globe, will be made
available to UK fund selectors
within the next few months.
The fund aims to provide capital
appreciation by investing
primarily in developed market
equities. It looks to maintain a
lower level of volatility than the
broader market by investing in a
portfolio of securities which are
weighted by expected risk and
return rather than market capitali-
sation or industry.
The fund is jointly managed by
US-based firms Acadian Asset
Management and Analytic
Investors.
SEI Investments head of UK sales
Ryan Hicke, said: ‘We expect the
Global Managed Volatility fund to
provide a greater level of sophisti-
cation in the creation of portfolios
for high net-worth clients focused
on capital preservation or stability.’
SEI Investments’ MoM
philosophy runs around £94 billion
in assets.
Performance Highlights
NOT A LOT OF PEOPLE KNOW THAT...Tony Vine-Lott, director general ofPIMA does love to be beside theseaside and is hoping to take hiscustom-built 40ft sailing boat out for a spin around Croatia this summer. The boat is being spruced up in a
shipyard in Denmark, where Vine-Lott’s other 28ft boat was built.Citywire Courier is wondering, at6’6” tall whether Vine-Lott ishaving a long-boat made?
Jourdan: top performer in sector
SMITH ON FUNDS
12 April 2007 4 www.citywire.co.uk
It seems John Richards’ step back frommanagerial responsibility at Société GénéraleAsset Management (SGAM) in favour of activefund management has not worked out.
Richards, who joined SGAM in 1998 as managingdirector, has left the group less than six months afterhis return to direct portfolio management.
Richards, 46, was joint chief executive officer(CEO), along with founding chief operatingofficer Alex Buffet, until last October and waspreviously chief investment officer (CIO).
Officially, he wants to ‘spend more time withhis family’, although I would imagine adviserswill be little surprised if he reappears in the fundmanagement industry before too long in anotherrole. SGAM does not expect him to resurface inthe near future and, if he does, not in a‘traditional corporate asset management role’.
After Richards stepped down as CIO, the rolewas split with Michala Marcussen, head ofstrategy and research, now taking on the role ofhead of asset allocation, Hari Sandhu as head ofUK equities and Sarah Pohlinger as head ofEurope and emerging markets.
Last October Jean-Baptiste Segard, previouslyhead of corporate clients in continental Europefor SGAM and a member of its executivecommittee, took over the full CEO role.
At that time Richards said: ‘Managing moneyhas always been what I enjoy most. Ourbusiness is entering a new growth phase, so itis a good time for me to focus entirely onportfolio management, as there is the risk thatthere could be too many demands on my timein the future. This way, I can devote all myenergies to ensuring we deliver strong returnsfor our investors.’
With Richards gone, and Nicola Horlickalready established in another fund
The departure of John Richards could spell stormy times for Société Générale,
with pressure mounting on new CEO Jean-Baptiste Segard to improve performance
management business, only SGAM chairman Keith Percy remains of the threefounders. The group has suffered several high profile departures in recent years,including Peter Seabrook and Dino Fuschillo and more recently Hugh Sergeantand Richard Staveley, although other founder members of staff, for exampletechnology specialist Alan Torry, remain in place.
Richards was responsible for the £50 million SG UK Concentrated Core fund,which has delivered a total return of 40.54% since March 2004 compared with anaverage 56.07% from IMA UK All Companies funds and a total return of 59.08%on its FTSE 350 benchmark index.
He has handed this fund over to David Benson, the group’s head of UK researchand manager of an institutional UK equity portfolio, along with his £460 million
SG Balanced Managed and his £125 million SGStockmarket Managed funds.
Richards’ Managed funds boasted second quartilereturns within their IMA sectors over the last fiveyears but third quartile performance over a three-year time frame.
More broadly, SGAM’s funds generally do little toexcite investors. Of 23 IMA funds, 18 currently sitwithin the third or fourth quartile of their IMA peergroups based on their performance in the mostrecent 12 months. Of 21 funds with at least a five-
year history, 13 sit in the third or fourth quartile while only one boasts a topquartile performance.
SGAM proudly boasts of its Japan CoreAlpha fund, which ranks number one of62 funds in its peer group over the most recent 12 months, and has recruitedrecently in areas such as European/Eastern European fund management.
However, with no central CIO role, investors must hope the new CEO will helpto shake up performance. Almost 10 years ago there was a definite buzz aboutSGAM and the industry had high expectations. However, almost 10 years later, itseems groups like Artemis and New Star have stolen SGAM’s thunder.
Richards retreats from Société Générale
Tota
l re
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s (%
)
-10
0
10
20
30
40
50
60
FTSE 350IMA UK All CompaniesSG UK Concentrated Core Retail Acc
Feb-07Mar-06Mar-05Mar-04
Richards’ SG UK Concentrated Core fund has lagged behind the FTSE 350 benchmark index
Source: Lipper
Richards’ Managedfunds boasted secondquartile returnswithin their IMAsectors over the lastfive years
by David [email protected]
IMA Team Award for Excellence inInvestment Writing 2005 & 2006
Citywire.co.uk
Don’t take ourword for it -That’s the view of the Investment
Management Association which
gave Citywire the Team Award
for Excellence in Investment
Writing 2005 & 2006.
Online or in print, Citywire brings
you the news and comment you
need to help you do your job.
Citywire Funds Insider™ New Model Adviser™ Fund Manager International™
Citywire Courier www.citywire.co.uk
SECTOR WATCH
Resolution’s Clark challenges Nimmo
12 April 2007 6 www.citywire.co.uk
Tota
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turn
s (%
)
-5
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5
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15
20
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35Average UK Smaller Companies managerHarry Nimmo
Feb-07Nov-06Aug-06May-06Feb-06
Harry Nimmo posted a return of 31% with his
Standard Life Investment UK Smaller Companies fund
by Dylan Lobo
The Smaller Companies sector displayed resilience over the last 12 months inthe face of increased volatility in markets. The average fund manager return inthe sector was 17.2%.
Harry Nimmo was the most successful small-cap manager during thesetroublesome times. He returned 31% on his Standard Life Investment UKSmaller Companies fund, which controls around £300 million in assets.
Nimmo is well known for his bottom-up approach to stockpicking. Some ofthe key contributors to his outperformance include software firm AvevaGroup; online database and services provider Datamonitor; outsourcingservices company Mears Group; and industrial safety group Latchways.
Nimmo highlights a number of factors which have helped smallercompanies in recent months, including strong results and bid activity.
In his most recent quarterly update Nimmo outlines why he remains bullishon the long-term prospects for smallercompanies. He said: ‘The long-term potentialfor smaller companies is undiminished, theunderlying trading environment continues tobe robust and we will take advantage of anyfurther volatility to add to preferred positions.
‘We continue to focus on quality growthcompanies with strong and visible earnings.Such companies will hold their value in thelonger term, even during periods ofmoderating economic growth, and will benefitgreatly from any recovery.’
Hot on Nimmo’s heels in second spot wasResolution Asset Management’s David Clark,who returned 30.55% on his ResolutionAsset Smaller Companies fund.
The fund typically runs between 65 and 90 stocks and its biggest holding atthe end of February was power protection solutions firm Chloride Group at3.1%. ‘Recent growth has been broad and based in geographic and productterms and the combination of recent acquisitions and a restructuring projectshould lead to healthy earnings growth,’ Clark says.
Clark also likes engineering and construction company Severfield-Rowen,which accounted for 2.9% of the portfolio at the end of February. ‘Thecompany operates mainly in the UK and is currently enjoying high plantutilisation, an improving revenue mix and buoyant trading. A recentacquisition is performing well and ongoing upgrades to earnings forecasts areexpected,’ he says.
Clark anticipates more volatile times for the markets but believes small-capshave the capacity to overcome the turbulence.
‘The market is likely to remain volatile as concerns over the global economypersist, particularly over the short-term. Our view is that any setback will betemporary and we do not anticipate any significant impact on the UK smallercompanies market, especially as corporate activity continues,’ he says.
Citywire AA-rated Simon Knott took third place with a return of 28.35% onhis Discretionary unit trust.
Old Mutual Asset Management’s AAA-rated Daniel Nickols, who scooped the
Standard Life Investments’
Harry Nimmo has marked his
return to form by producing
the best performance in the UK
Smaller Companies sector over
the last 12 months
All graphs sourced to Citywire Financial Publishers www.citywire.co.uk (020 7840 2250)
Rankings based on 1 year MR* in UK Smaller Companies
sector at 10 April 2007
Sector TrackingName MR* error Contributing fund
David Clark 2.2697 5.6359 ResolutionAsset Smaller Companies
Harry Nimmo 2.1717 5.9454 Standard Life UK Smaller Companies
Daniel Nickols 1.7958 5.8875 Old Mutual UK Select Smaller Companies
Georgina Brittain 1.6122 4.1387 JPM UK Smaller Companies
Mark Davids
Paul Marriage 1.2694 7.2269 Cazenove UK Smaller Companies B
Managers ranked by their sector-specific manager ratio
*Citywire’s exclusive manager ratio (MR) is a measure of how much value inpercentage terms is added for every unit of risk taken on an annualised basis. An MR of 0.5 is considered good and over 1 excellent.
‘The long-termpotential forsmallercompanies isundiminished’
Harry Nimmo,Standard Life
SECTOR WATCH
How to read the performance tablesThis column highlights the manager’sperformance in discrete one year timeperiods. The figure takes into accounttheir work on the different funds theyhave run during the period under reviewwithin the IMA sector under analysis.
Discrete quarter-by-quarteranalysis of fund manager
This column identifies the funds currently managed by theindividual manager in the specific sector. Funds have to beactively managed funds available to retail investors to qualifyfor inclusion. This means passive funds and institutionalfunds are excluded from analysis.
www.citywire.co.uk 7 12 April 2007
He told Citywire: ‘Theportfolio is tilted towardsthese companies becausethey are likely to securenew contracts which arenot factored into analyst’sforecasts.’
Other key holdingsinclude Synergy Healthcare,a specialist provider of non-sterile and sterile productsto the NHS; training servicesgroup Carter and Carter,which runs Government-backed training schemes;and IT and software group Civica.
Only two fund managers delivered negative returns over the 12 months,including Canada Life’s Craig McDougall, whose dire period of form continued.McDougall has failed to beat the sector average in each of the last three 12month-periods and was the sector’s worst performer with a loss of 7.65% on hisCF Canlife UK Smaller Companies fund.
Paul Mumford also delivered negative returns over the 12 months, losing1.8% on his Cavendish AIM Retail fund. Former AAA-rated Mumford hasstruggled to recapture his form after losing his rating in August 2006.
The following five pages show five discrete years of fund-managerperformance data for the UK Smaller Companies and UK Equity & BondIncome sectors, broken down quarter-by-quarter in each year. CitywireCourier covers the 24 key unit trust sectors regularly.
Citywire All Stars fund manager of the yearawards in 2006, was the fourth best performingmanager in the sector. He returned 28% on hisOld Mutual UK Select Smaller Companies fund,which recently closed to new investment in a bidto protect performance.
It was also a good year for AAA-rated PaulMarriage, who returned 25.9% on his CazenoveUK Smaller Companies fund, which he launchedat the start of January.
Meanwhile, Stuart Harris gave Credit Suissesomething to smile about during a difficult fewmonths at the group. He was the seventh bestperformer in the sector with a return of 24.5% onhis Credit Suisse UK Smaller Companies fund,which he assumed control of in July 2005.
Harris applies a rigid structure to the fundwith around 30 stocks on a 1% weighting and amiddle core of 20 stocks with a 2% weighting.Top 10 holdings comprise around 30% of thefund at 3% bets each.
In an exclusive interview with Citywire lastmonth Harris said his focus on undervaluedgrowth and outsourcing stocks had driven theperformance of his fund.
The fund is currently weighted to outsourcingstocks because Harris expects the government’sspending review to focus increasingly on a rangeof government services, including healthcare andeducation.
Tota
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Average UK Smaller Companies managerDavid Clark
Feb-07Nov-06Aug-06May-06Feb-06
David Clark returned 30.55% with his ResolutionAsset
Smaller Companies fund
All graphs sourced to Citywire Financial Publishers www.citywire.co.uk (020 7840 2250)