Newton fund merger halted by shareholders

Newton fund merger halted by shareholders

Newton’s £101.9m Managed Income fund will not roll into the company’s £13.6m Multi-Asset Income fund after the proposal was rejected by shareholders.

The merger of the fund-of-funds product into its sister vehicle was said to have been part of Newton’s attempt to shift away from multi-manager products and cut costs.

In a statement, the company said shareholders voted against the decision at the 14 April extraordinary general meeting, but could not confirm shareholder reasoning. It said the fund will continue to operate in its current form.

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However, Newton added that it had not ruled out any additional merger proposals for the Managed Income fund.

Newton stated: “The extraordinary resolution for the merger was not passed by shareholders and, therefore, the merger will not take place. As stated in the proposal for the scheme of arrangement document dated March 10 2016, the Newton Managed Income Fund will continue to operate in its current form.”

When the merger was first announced, Newton said the roll over was part of its effort to “simplify its multi-asset range and streamline costs”.

Fergus McCarthy, head of UK and Ireland intermediary distribution at Newton’s parent company BNY Mellon, had said: “The industry is moving away from fettered and unfettered fund-of-funds to more streamlined and cost-effective multi-asset solutions.

“The two funds aim to deliver very similar outcomes, but the Multi-Asset Income fund does it more flexibly and more cost-effectively.”

The Multi-Asset Income fund has also outperformed its larger fund-of-funds peer, returning 4.3 per cent since launch in February 2015, compared to the Managed Income fund’s 1 per cent, FE Analytics data showed.

Over three years, the Newton Managed Income fund returned 9.4 per compared to the IA Mixed Investment 20-60 per cent sector, which returned 11.6 per cent over the same period, according to FE Analytics.