Jupiter’s Merlin team have sold their significant stakes in the Artemis Income and Kames High Yield Bond funds after both portfolios saw managers exit last month.
The multi-manager team, headed by John Chatfeild-Roberts, removed exposure to both the Artemis and the Kames products from their £3.6bn Income and £1.5bn Balanced portfolios in June, according to latest factsheets.
Merlin Income alone held a £238m position in Artemis Income and a £135m position in Kames High Yield as recently as this April. Data provider Morningstar estimates the £6bn Artemis fund suffered a net outflow of £370m last month, with Kames’ £1.1bn fund seeing £205m leave.
Both funds saw managers depart last month: Artemis’ Adrian Gosden left after 13 years at the firm, while Kames hired David Ennett from Standard Life Investments to replace the outgoing Claire McGuckin.
The Merlin team’s moves came as part of a reduction of its Income fund’s UK equity holdings, a move which may also have been connected to the UK’s vote to leave the European Union on June 23.
UK equities accounted for 54 per cent of Merlin Income at the end of May but this had fallen to 45 per cent as of the start of July.
Royal London UK Equity Income was also a victim of this reduction. The fund was removed from Merlin Conservative, a much smaller Jupiter product at just £35m in size. But Morningstar estimates the Royal London product saw a £193m net outflow in June, a figure which suggests other Merlin portfolios may also have cut back exposure.
Some of this UK money has been shifted into global equities, which now account for more than 9 per cent of the Income portfolio, up from less than 4 per cent.
This increase appears to be the result of a new position in Terry Smith’s Fundsmith Equity product, a portfolio held across a number of other Merlin mandates. Mr Smith’s fund is not a traditional income vehicle but does offer a gross yield of 1.9 per cent.
Both the Income and Balanced funds also have sizeable cash holdings as a result of the changes. The former has 6.3 per cent in cash and the latter has 7.3 per cent as of the start of this month.
Jupiter declined to comment on the changes, but the Merlin team said in their latest update to clients: “The current market dislocation can create significant opportunities; we and our underlying managers will seek to take advantage of this in the weeks and months to come.”