Fund buyers may start exiting Newton’s £5bn Asian Income fund after the shock announcement its manager Jason Pidcock would be moving to rival Jupiter.
Mr Pidcock joined Newton in 2004, but caught investors off guard last week with his resignation so he could launch an Asian income fund at Jupiter.
A raft of removals from recommended fund lists duly followed, but some also divested their holdings in the vehicle, which has been a top-performer in the long term but has lagged peers more recently.
Ben Willis, head of research at Whitechurch Securities, said Mr Pidcock’s departure was a “surprise”, adding that he had invested in the fund from launch within his discretionary portfolios.
He said: “We have had concerns about the fund’s size over the years, [and this] has seen us scale back our exposure. However, our belief in Mr Pidcock’s ability and expertise in managing the fund was the main reason for maintaining our position.
“Now that he has moved on, the decision has been made for us and we are selling our entire position.”
Mr Willis added he would be “very interested” in the new venture and that he would hold the proceeds from the fund sale in cash for the time being, with markets “at or near record highs”.
Ian Aylward, head of multi-manager research at Aviva Investors, said he had already removed Mr Pidcock’s Oriental fund from a preferred list he and his team populated on his parent company’s platform.
“The fund was removed due to the extreme key man risk and its poor performance,” he said.
“The departure is a blow for Newton. It is challenging for the future for one of its three flagship strategies, alongside the global equity income desk and the multi-asset desk.
“I note that they are merging the global emerging markets and Asian desks as a result.”
Mr Aylward said Mr Pidcock’s move to Jupiter was “intriguing”, given the recently revamped emerging markets team under former Standard Life Investments manager Ross Teverson.
“We will be watching to see how that dynamic plays out given that Asia is two thirds of the global emerging market universe, and especially as Jupiter has a sizeable China fund,” he added.
Margetts Fund Management senior analyst Julia Whiting said Mr Pidcock’s Asian Income fund featured prominently in its Providence Strategy vehicle at 6.3 per cent and was a 5.9 per cent weighting in its Venture Strategy fund.
She said the company would be refreshing its research on the fund to better ascertain the impact of Mr Pidcock’s departure and would make a decision based on the outcome.
“We will be looking at how the team and strategy will change and gauge the risks,” she said.
The Asian Income fund has produced top-quartile returns since its launch in November 2005 after returning 180 per cent compared with the FTSE Asia Pacific excluding Japan index’s rise of 165 per cent, data from FE Analytics shows.
However, performance has been challenged more recently with the fund in the bottom quartile of its peer group across one- and three-year periods.
Jupiter head of investments Stephen Pearson said Mr Pidcock’s strategy was “complementary to what we are doing in global emerging markets”.
Mr Pearson said: “He has a more established style that is value-oriented. It is a different type of product and focus, so it will add an exciting new dimension to what we are offering.
“It’s proof that we are serious about investing in this area.”
Charges could be key for Pidcock’s new fund at Jupiter
While Newton will no doubt be irked about the loss of such a high-profile manager as Jason Pidcock, Hargreaves Lansdown’s Mark Dampier wasn’t too happy about it either.
The broker’s head of investment research said Jupiter was often “way out of line in terms of fees” and so hoped it would price any fund run by Mr Pidcock appropriately.
Mr Dampier said: “[Jupiter] tends to price 30 basis points above the annual management fee, and for Mr Pidcock’s fund that would come in at more than 1 per cent. It’s a good hire for Jupiter, but it’s not a move I like.”
Mr Dampier said the Newton Asian Income fund had been on Hargreaves’s Wealth 150 list and the discounted Wealth 150+ list, whereas no Jupiter funds were on the latter.
A brief search shows he might be right about the price of Jupiter funds. For instance, its European fund’s clean fee share class has an ongoing charges figure (OCF) of 1.03 per cent, its factsheet shows.
Looking at some similar-sized products shows rivals are cheaper. Henderson’s European Selected Opportunities and Standard Life Investments’ European Equity Income funds have OCFs of 0.85 per cent on their clean share classes.
Jupiter declined to comment.
