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Asset Allocator

from Asset Allocator

Gars-tly luck

One of the curiosities previously highlighted by Asset Allocator was how DFMs had steadily abandoned the Abrdn Gars fund, with thus far one exception: Abrdn's own DFM team.

But the latest update of our own database shows even they have now exited the fund, meaning the mandate that was once the largest in the UK retail space is now not held by any of the DFMs we cover.

Data from FE Analytics shows the fund itself has shrunk to £1.5bn in size, having been £20bn in February 2018 and even larger before that. 

It doesn't take a quant genius to figure out the reason for the decline of the mandate. It has lost 4 per cent over the past five years, a time period when the sector average return is a gain of 5 per cent.

The fund's aim is to deliver positive returns "irrespective of market conditions".

Well, it has lost 10 per cent this year to date, and has made losses in two of the previous four years, periods when it's fair to say investors have experienced all manner of market conditions. 

Performance this year has probably not been helped by the fund’s two largest investments, which account for 15 per cent of the capital each, being two UK gilts. 

Setting market issues aside for a moment, allocators may ponder the point of paying a 1.16 per cent fee for a fund manager to place 30 per cent of their assets in very short-dated gilts and another 36 per cent in money market funds and to then lose 10 per cent.

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