Hargraves’s Axa Global Opps fund dwindles on rating cut

The Axa Framlington Global Opportunities fund has seen its level of assets under management plunge by two-thirds in just two months after a major consultancy cut its rating.

Mercer, one of the world’s biggest investment consulting firms, downgraded the fund in July in a move that triggered a raft of exits from institutional investors.

The fund had £293m of assets in mid-July but by mid-September this had fallen to £92.3m, according to estimates by FE Analytics.

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The fund’s manager Mark Hargraves said the rating cut followed the news in June that his former co-manager, Anu Narula, was leaving the fund to join Mirabaud Asset Management.

“It is frustrating because you never like to lose assets, but it is up to us to get that rating back,” he said.

The 37-year-old fund was once managed by First State’s emerging market expert Jonathan Asante and earlier than that it was headed by now Axa Architas multi-manager Caspar Rock.

In 2007, it was taken over by Axa Investment Managers’ high-profile manager Mark Tinker and renamed from its previous title as the Managed Growth fund the following year.

But Mr Tinker’s performance faltered in 2008 as he failed to fully foresee the deep financial crisis that engulfed the global economy.

Macroeconomic expert Anu Narula joined as a co-manager in January 2009.

In 2010, UK broking giant Hargreaves Lansdown advised clients to switch out of the fund and into products headed by Jupiter’s rising star multi-manager John Chatfeild-Roberts instead.

Mr Hargraves, who once co-managed the fund in the past, recently rejoined to replace Mr Narula.

Since the Mercer downgrade took place, Axa has also announced that Mr Tinker was relocating to Hong Kong to work on the firm’s Asian expansion.

But while management turnover has been relatively high, the fund’s performance has stabilised since the slump of 2008.

The fund ranks in the third quartile of the IMA Global sector in the past year, delivering a 15.4 per cent return, rather than the 15.7 per cent average return from the sector, although the fund has been outperforming so far in 2013.

Mr Hargraves said he “would not dwell on the rating change”, adding that the money flowing out had not disrupted the portfolio unduly or impacted on the remaining investors in the fund.

He said he had not made any major changes to the portfolio since taking back over from Mr Tinker and said he was continuing to play the investment themes that were in place before he joined the fund.

He said a major theme had been investing in companies in the developed world that were taking advantage of the growth in Asia and the developing world.

However, the fund had avoided the consumer stocks such as Unilever and pure emerging market themes, both of which have underperformed in recent months.

The fund also has a bias towards gaming stocks and technology stocks such as Google.