Investments  

IFA ‘in the lurch’ as fund shut without warning

IFA ‘in the lurch’ as fund shut without warning

An adviser has been “left in the lurch” after Marlborough Fund Managers shut its commodity fund without contacting his advice firm.

Sam Banning, chartered financial planner at Star House Financial Services, told FTAdviser the boutique asset manager had “let him down” when he found out via a platform that he would need to move clients’ investments out of the fund, which formed part of his model platform service, in two weeks’ time.

He said: “Even though our firm is effectively the fund’s biggest investor, we only found out [yesterday] when we attempted to switch into the fund and were told by the platform it had closed to new investment.

“When I rang our representative at Marlborough, it was the first he had heard about it, too.

“I gave our contact another ring this morning but he still had no information, he just apologised. They’ve used remote working as an excuse but that isn’t really an excuse, is it?”

Mr Banning said it felt as if Marlborough was “leaving [his firm] in the lurch”, adding that there would not have been a problem had the fund house decided to close the fund, but the issue was the lack of communication and the “out of the blue” nature of the closure.

Star House now has two weeks to perform due diligence on the portfolios in line to replace the fund in the firm’s MPS, as the adviser does not want clients “to have a small but meaningful part of their portfolio sitting in cash”.

He added: “We won’t go back to Marlborough now or use them again. They are not the only boutique fund house on the market and I don’t see how we can contemplate using their funds anymore if we have no confidence this won’t happen again.”

A spokesperson for Marlborough Fund Managers said: “We wrote to registered investors and those platforms that are registered holders of the Marlborough Commodity Fund on 16th October to tell them about the planned closure of the fund on 27th November.

"However, we are looking into this matter because we pride ourselves on providing the very highest standards of service for advisers.

“We regularly monitor all of our funds and decisions about closure are only taken after a very thorough review.”

A letter about the fund’s closure, published on the Old Mutual Wealth website, said Marlborough did not believe the fund was “economically viable” at a size of £9.7m and as a result, the fund house had decided to close the fund.

The Marlborough Commodity fund is currently around half the size it was in November 2018, when £19.7m of assets were invested in the portfolio.

But according to Mr Banning, his firm sought assurance that the size of the fund would not be an issue back in 2013, when the portfolio was also only around £10m.