Several major multi-managers have dumped their holdings in Ignis’s Absolute Return Government Bond fund after the bulk of the team behind it defected to rival Old Mutual Global Investors (OMGI).
In a blow to Standard Life Investments (SLI), which bought Ignis earlier this year, head of rates Russ Oxley and five members of his team are set to join OMGI next year to launch a suite of absolute return fixed income funds.
At the time of the purchase, SLI said the fund was “complementary” to its suite of absolute return products, including the giant £21.6bn Global Absolute Return Strategies (Gars) fund.
But the departure of key members of the team has prompted several major multi-managers to remove holdings from their funds.
Architas chief investment officer Caspar Rock said the change in management was a “fundamental change to the way the fund is operated”.
“The departures covered the day-to-day trading, ClearCurve analysis, full portfolio construction, positioning and marketing,” Mr Rock said.
“Although these processes will remain in place, the individuals in this case were fundamental to the operation of the fund.”
Ignis chief investment officer Chris Fellingham has taken the fund on alongside SLI’s Jonathan Gibbs and Adam Skerry – but Mr Rock said the last two had joined from the inflation team “rather than having a strict absolute return investing background”.
“While it is unusual for us to react straight away following the departure of a manager, overall it is very hard to justify remaining invested in a fund that has undergone such significant change and the immediate or imminent removal of a number of key individuals,” he added.
David Coombs, head of multi-asset at Rathbone Unit Trust Management, said that selling straight after a manager’s departure was an “unusual” step for him.
“When SLI came in for Ignis, we had concerns about whether the rates team would stay together and how it would fit into the SLI business, given the Gars team,” Mr Coombs said.
He said he had given the company the “benefit of the doubt” after being “assured the rates team would be managed at arm’s length”.
“The team I invested with is not there any more and so, frankly, I cannot keep that investment,” he added.
Aberdeen Asset Management’s multi-manager team also held the fund – but Graham Duce, director of multi-asset, said his team had sold too.
Whitechurch Securities’ managing director Gavin Haynes said he would maintain his position, but would “monitor the fund closely”.
Head of managed funds at Sanlam Private Investments, Paul Surguy, said he thought the outperformance by the fund, known as alpha, was delivered half by Mr Oxley and half by Stuart Thomson, who remains with the fund. “We are on hold pending a meeting with the new set-up,” said Mr Surguy.
A spokesperson for SLI said: “Investors continue to recognise the unique characteristics of this fund, which has a strong long-term track record.
“While inevitably there will be short-term fluctuations, as long-term investors we believe this fund has an important role to play in a diversified portfolio. We remain committed to providing strong performance and high levels of client service.”
SLI added that the intellectual property that supports the fund, the process and the Ignis risk team, which supervises the fund, remain unchanged.
It said that Mr Gibbs and Mr Skerry, who will help run the fund, were from its inflation team and will assume additional responsibilities for the fund.
New man at the helm forecasts bright future for absolute return
Some major investors have taken flight on the back of significant departures from the team behind Ignis’s most successful fund – but new man at the helm Chris Fellingham seems to be upbeat about the future.
In a two-page statement, Mr Fellingham said absolute return would become “the most important asset class in the next five years” as investors realise returns from the previous five years had been beta and not alpha.
Mr Fellingham, Ignis’s chief investment officer, said he had “leaned heavily” on his experience at Soros and BlackRock to build a team that “combines the best of long-only and the best of long/short, which is essential in my view to build an absolute return product”.
Standard Life Investments’ Jonathan Gibbs and Adam Skerry would “make a significant contribution to the idea generation of the fund”, he said, while Stuart Thomson, who had “always been responsible for the investment strategy of the portfolio”, would continue to have an input.
Mr Fellingham added that Simon Mungall, who runs Ignis’s Tactical Asset Allocation fund, would help him with risk control on a “day-by-day, minute-by-minute basis” and that the rest of the Ignis risk management team would be “critical”.
There was also an assurance that there would be “no change” to the investment strategy, and the use of the proprietary forward rates system called ClearCurve would continue.
