Multi-managerNov 10 2014

F&C puts up £20m to launch SLI fund

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F&C Investments’ multi-manager team has provided seed money for a fledgling emerging markets fund in spite of a bearish view on the asset class.

The multi-manager team said it had urged Standard Life Investments to launch an onshore version of its existing offshore Global Emerging Markets Equity Unconstrained fund run by Matthew Williams.

Gary Potter, co-manager of the F&C Lifestyle multi-manager range, said his team had been the main seed investor in the fund to help it launch.

Mr Potter, who manages the F&C funds along with Rob Burdett and Scott Spencer, said he had invested £20m in the new fund, spread across the Lifestyle funds and the mandate he runs for the Foreign & Colonial Investment Trust.

The move comes in spite of F&C holding an underweight position to emerging markets across its mandates.

“In the global mandate, the historic weighting in emerging markets is 14 per cent, but the current weighting is 3 per cent,” said Mr Potter.

But the switch into Mr Williams’ fund has come because the F&C managers have a negative view on the region. Instead of broad emerging market exposure, he wants the “winners list” of stocks selected by the SLI unconstrained team.

Mr Potter said he had wanted to invest in the new fund to get access to SLI’s team of stockpickers and their benchmark-agnostic approach of picking the best companies on a bottom-up basis.

SLI has been running an offshore version of the fund since 2012, but F&C had been pushing the firm to launch an onshore version for some time.

Between the launch of the offshore fund and the end of September 2014 it returned 26.1 per cent, compared with the return of 5.7 per cent from the benchmark MSCI Emerging Markets index.

The plans to bring the fund onshore hit a snag over the summer when the manager, Ross Teverson, left to join Jupiter as head of strategy for global emerging markets. Mr Williams took on the management of the fund and Mr Potter said that, having met with both Mr Williams and Mr Teverson since the manager change, he was “absolutely happy with him as manager”.

While waiting for the launch of the onshore unconstrained fund, the F&C team had been investing in Alistair Way’s Standard Life Investments Global Emerging Markets Equity fund, which is more of a core product than the unconstrained fund. However, he has now switched that exposure into the new launch.

While the F&C team currently has very low exposure to emerging markets, Mr Potter said that exposure was likely to go up rather than be reduced further.

But he said he still had concerns about the impact on emerging market equities from the stronger dollar and the fall in commodity prices.