Swip multi-managers suffer Skipton blow
More on Multi-Manager Funds
- Fund Selector: Appreciating bond risk
- Morningstar downgrades Jupiter Merlin range
- Henderson’s McQuaker dips toe in emerging markets
In focus: Outsourcing Investments
Scottish Widows Investment Partnership’s (Swip) underperforming Multi-Manager Diversity fund has more than halved in size after its biggest investor pulled out.
The fund, which is managed by Mark Harries and Simon Wood, had assets under management of £228.2m at the end of March, according to Morningstar, but this had fallen to just £96.3m by the end of June.
The slump came as Skipton Financial Services (SFS) - the fund’s previous biggest supporter, which recommended it on an internal ‘investment panel’ published to its roughly 110,000 clients - decided to drop the fund from the panel.
“The Swip Diversity fund had been on SFS’s panel for several years. However, following a period of disappointing performance it was removed,” A Skipton spokesperson said.
“The long term investment strategy of the Diversity fund is to hold a relatively low weighting in equities and SFS felt that over 2011 this strategy should have produced better returns than it actually did.
“In February this year, SFS contacted existing investors in the fund to make them aware that it had been removed [from the panel] and subsequently many of them chose to switch out of the Swip fund.”
From its launch in December 2007 to July 23 this year the Swip MM Diversity fund delivered a third-quartile 7.7 per cent return, according to Morningstar. Consumer prices index inflation, which the Swip fund lists as its benchmark, rose by 15.8 per cent over the same period.
In the past year the fund lost 4.1 per cent, ranking it 138 out of 154 funds in the IMA Mixed Investment 20-60 per cent Shares sector.
Swip’s Mr Harries said the decision by the fund’s largest backer to pull out had an “unfortunate” effect on the scale of the fund. He said the portfolio had to be repositioned during February and March to free up the money to pay the investors back.
The team used derivatives to manage investors’ redemption requests, he said.
A Swip spokesperson said: “The Swip Multi-Manager team is only one of three managers that has outperformed the IMA Mixed Investment 20-60% Shares sector average in each of the five consecutive calendar years to the end of 2010.
“Although 2011 proved problematic with high yielding, large cap shares and corporate bonds performing much more strongly than growth or mid cap shares, we believe that the Swip MM Diversity fund remains a strong long-term multi-asset solution for investors.”