Artemis is to rearrange its fund range through mergers, reviews and new hires after it found some of its portfolios were not performing or growing to its standards.
The fund house’s 53-page assessment of value report, published last week, found the vast majority of funds provided by Artemis delivered “very good value” to clients, with “reasonable” costs, comparable market rates, good performance and standard share classes.
But the value report also shone light on a number of funds that did not reach this standard.
Artemis’ Pan-European Absolute Return fund for instance has been put under review after the value assessment showed it had not met its objective over the past two years.
The fund house stated: “Although the fund outperformed its cash benchmark in the three years prior to 2018, the fund has not since met its primary objective of achieving positive returns.
“Moreover, performance has been volatile, with repeated periods of sudden, significant downside volatility. Given the small size of the fund (approximately £7m) due to both performance and redemptions, we have undertaken an assessment of the ongoing viability of the fund.”
Artemis said it was reviewing the fund’s future prospects and would communicate with clients later this year.
Although Artemis found its Strategic Assets fund had delivered value to clients and had performed as expected given prevailing market conditions, the report stated the portfolio would benefit from “broader-based decision making”.
The fund house is therefore appointing Kartik Kumar to co-manage the fund with William Littlewood in 2020. Mr Kumar has worked on the fund as part of the team since 2013, having joined Artemis in 2012.
Artemis also decided to merge its US Equity fund with its US Select fund in a bid to pass on economies of scale and “continue to deliver very good value to clients”. The funds merged in February 2020.
It stated: “We undertook an assessment of the ongoing viability of the fund. Having considered a number of options, we concluded a merger of the fund with a fund following a similar strategy was in the best interests of clients.”
Its Global Equity Income fund is also being merged into its Global Income portfolio.
Artemis found both funds delivered value to clients, but following a reduction in the size of the Global Equity Income fund due to redemptions in late 2019 and early 2020 the firm reviewed the fund to ensure it met clients’ expectations.
“We have considered a number of options…[and] concluded it would be in the best interests of clients to merge this fund into the Global Income fund”, Artemis stated.
The Global Income fund is a larger strategy and can therefore provide cost savings to clients. The merger is subject to approval and is planned for Q3 2020.
The report said Artemis would also continue to monitor its UK Special Situations fund and European Growth fund, as both only provided “value” rather than “very good value” to clients.
As part of the regulator’s asset management review, fund houses are now required to carry out an annual assessment of whether the firm provides value for their clients.
The assessment criteria set out by the FCA include performance, general costs, economies of scale, comparable market rates, comparable services and share classes.
The rules have seen Aviva cut fund prices while commentators have suggested the reports could see an end to trail commission.
Hargreaves Lansdown and Vanguard both published the statements of value for their respective funds, with Hargreaves stating it believes its range of multi-manager funds represent good value despite a sustained period of underperformance in the portfolios and high fees.
imogen.tew@ft.com
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