Inroads into the developing world and maintaining a duty of care

Last year was crucial for Threadneedle. The board appointed Crispin Henderson chief executive, the company rebranded, and its retail funds delivered impressive returns.

This year, the firm has been continuing its inroads into the developing world with a new office in China, following the integration of emerging market absolute returns specialist Convivo Capital Management. As Threadneedle is just beginning to establish its commodity capabilities, this transaction symbolises its strengths in two other sectors attracting widespread retail interest.

Although the firm's performance in these areas has been excellent recently, its asset gathering has been more uneven. The Latin America fund outperformed every other Latin America portfolio in the IMA Specialist sector over the year to 9 June, the Global Emerging Markets and China Opportunities funds were first quartile and the Absolute Return Bond fund was second only to the £864.9m BlackRock UK Absolute Alpha fund in the new IMA Absolute Return sector. The Threadneedle Asia and Emerging Market Bond funds have also outperformed their sectors and benchmarks on a five-year basis.

But whereas Asia and Latin America have raised £831m and £1bn, respectively, Global Emerging Markets has reached just £39m against a sector average of £249.6m, and China Opportunities only £56.3m. Now more than a year old, Absolute Return Bond has taken £53.1m as opposed to the £161.1m generated by the Henderson Credit Alpha fund, which, at 9 June, had not yet celebrated its first birthday. But Emerging Market Bond has obtained £117.6m, a large sum by the standards of its competitors.

Head of UK retail sales Gary Collins is unable to explain why the Gem fund had not raised as much as some of Threadneedle's other products. "I really don't know. It’s something we need to address if we're raising the amount of money we are in Latin America."

But as Mr Collins observed, improvements have been moving faster in retail than in institutional, especially after Threadneedle's parent company Ameriprise gave it a larger marketing budget. "There was a view in the marketplace two to two and a half years ago that the Threadneedle brand was a little tired," he says.

Most recently, Threadneedle has been using its expanded absolute return presence to push through its extended alpha concept, which employs the shorting skills of an absolute return strategy in a similar manner to 130/30. Mr Collins is also pleased at the range of responses to Absolute Return Bond, which clients have seen as a cash replacement, a fixed income play, an uncorrelated asset class or an unleveraged global macro hedge fund.

But he says some IFAs may be entering alternative products such as BlackRock's £864.9m UK Absolute Alpha fund without fully understanding how they operate. "If you look at the greater complexities, the mass IFA will look through that. I can’t believe every IFA who advises clients to put money in that fund understands how CFDs work."