The range of three funds – the £8.5m Kames Global Equity, the £27.5m European Equity and the £20.2m American Equity – are not promoted by the group and do not feature on its website.
The funds have been running for at least 26 years, but in recent years the group has adopted a low-profile approach to marketing them, following sustained poor performance.
They all continue to report firmly bottom-decile returns in the past five years, but Mr Hillier said his efforts since joining the firm as head of overseas equities from LV= Asset Management (LVAM) in March 2012 are showing signs of taking effect.
He said the Global Equity fund – which he took over from Ian Cooke when he started at the firm – now ranks in the top quartile of the IMA Global sector in terms of its one-year returns.
The European Equity fund, run by Stuart Fraser, is showing signs of improvement, too, having delivered second-quartile returns in the past year.
However, the Kames American Equity fund – which was formerly run by Mr Cooke before being placed under the control of Mr Hillier’s former LVAM colleague Marcus Chandler at the start of the year – ranks third quartile.
Mr Hillier said the turnaround signs reflected his focus on implementing a consistent strategy across the range.
Measures now employed include new screening tools for stockpicking and improvements in the products’ risk management protocols, especially in terms of position sizes and optimisation.
“I have seen a general improvement across the board in overseas equities,” he said.
“We have evolved the select ‘best ideas’ strategies, and I am pleased with the progress there – it certainly looks a lot better.”
The group is planning to make the Global Equity fund more appealing to advisers by merging a large volume of institutional assets held offshore into the strategy to get it up to a viable size.
Regarding the Kames European Equity fund, Mr Hillier said it had not needed much alteration beyond the changes made to the overall range.
He said the American fund is benefiting from the appointment of Mr Chandler.
“Marcus came on board to improve the quality of the bottom-up research being done by the team, which was not as strong as we would have wanted,” said Mr Hillier.
“We have put in a new manager, and it takes time to change things around.”
Mr Hillier said the stockpicking approach has improved across the funds, which is evident in the contribution of the best stock ideas from Europe and America to the global fund’s performance.
The range also includes an offshore Asian fund, but Mr Hillier said this is still long from being fit for promotion to UK retail investors.
The manager said there were currently no plans to bring the firm’s offshore overseas equity income funds, including the $520m (£338.1m) Kames Global Equity Income fund, to the UK retail market.
Teaching a dog fund new tricks
The Kames Global Equity fund has been a regular on lists of worst funds within IMA sectors.
The Bestinvest Spot the Dog report referred to it this year as a “repeat offender”, and said Piers Hillier (pictured) is the latest in a long line of manager changes on the fund, which has experienced weak performance under Innes McKeand and then Ian Cooke.
It has also been included on Investment Adviser’s ‘red flag’ list of funds that are in danger of being closed or merged due to size and underperformance worries since the list was introduced in 2010.
The one-year performance figures now look promising, however, and a spokesperson for Kames Capital said a significant period of underperformance is due to fall out of the three-year comparisons in the coming weeks, which Kames thinks will bring the fund into the top quartile for the past three years.
Kames hasn’t actively marketed these international equity funds for some time, and it is hard even to find factsheets for them, as the consistent underperformance of the funds has hindered any attempts to promote them.
But with Mr Hillier seemingly turning things around, Kames is looking into getting some institutional mandates into the Global Equity fund before actively marketing it to the wider retail market.
