Fund Times: 8 - 12 September
Gartmore to Launch Absolute Return Fund; More Turnover at Old Mutual: CEO Steps Down; JPM Poaches Schroders Global Fixed Income Head; AXA Reshuffles Fixed Income Division and Appoints New CIO; Asset Management Firm Launches UK Repossessions Fund
Gartmore to Launch Absolute Return Fund
Gartmore will launch a European absolute return offering on 31 October 2008 – the first of a number of absolute return funds planned to be launched by the firm. The UCITS III fund will be comanaged by Roger Guy and Guillaume Rambourg, with a pre-set capacity of £200million (based on £1 per share during the offer period which commences on 6 October 2008). Like any absolute return fund, this will take long and short positions in equities and derivatives in an attempt to achieve its objective of generating positive absolute returns over the long-run across different market environments. Investors should note, however, that whilst absolute returns are an admirable goal, actually achieving them through time is easier said than done. The fund’s strategy will be comparable to that of Gartmore’s AlphaGen Capella fund – a European long/short equity hedge fund. Gartmore has built its hedge fund business over the last ten years and currently manages hedge fund assets in the amount of £11 billion.
Absolute return funds have become especially popular recently as investors try to combat market volatility. Indeed, the IMA UK Absolute Return sector was the best selling sector in July 2008 for UK domiciled funds, with net inflows at £262 million. These statistics reflect investors’ sentiment on risk as they flee to the perceived safety of absolute-return vehicles. Nevertheless, this trend is worrying as few of these funds have long enough track records, and the structure of their portfolios makes their risks hard to quantify.
More Turnover at Old Mutual: CEO Steps Down
Old Mutual’s Chief Executive Officer, Jim Sutcliffe, has stepped down this week. This coincides with the firm’s $135 million write down of Freddie Mac and Fannie Mae preferred stock held by its US Life business. Sutcliffe has been replaced by Julian Roberts, who has been the Chief Executive of Skandia for over two years – a member of the Old Mutual Group. Roberts was the Group Finance Director at Old Mutual Plc, prior to that.
JPM Poaches Schroders Global Fixed Income Head
JP Morgan Asset Management has appointed Schroders’s Robert Michele as Global Chief Investment Officer of Fixed Income. Schroders’s head of global credit strategies Lisa Coleman and head of US fixed income Steven Lea will also be leaving to join JPM. In his new role, Michele will oversee the London and New York fixed income teams. Michele was the global head of fixed income at Schroders, managing over 100 investment professionals spanning nine locations. Michele also managed the Schroder Strategic Bond fund since its inception in 2003. The fund’s return over its lifespan is comparable to its category peers, though it has exhibited above average volatility. The fund generated annualised returns of 4% over the last five years to 5 September 2008 while its average rival in the Sterling Diversified Bond category banked 3.4%. However, the fund has struggled so far this year, residing in the bottom quartile of its Sterling Diversified Bond category and shedding 3.8% of its value. The fund has now been handed to manager Nick Gartside.
AXA Reshuffles Fixed Income Division and Appoints New CIO
AXA Investment Management is re-organising its fixed income operations, headed by Theo Zemek (who came over recently from New Star), and has appointed Chris Iggo as CIO of fixed income. The firm will be putting together an interest rate and asset allocation team and a credit specialists team, as opposed to its current product-specific team structure. Its aim is to facilitate consistent market research and strategies across the investment teams. Iggo, who has been with AXA as a strategist since 2005, will also head the interest rate team and take responsibility for the investment process, asset allocation and performance. The credit team will be divided into two regions – US Credit and Credit ex-US – and will be comanaged by veteran fixed income manager Hannah Strasser and another member who has yet to be appointed. These changes will be implemented during the fourth quarter of this year, however, AXA asserts that there will not be radical changes to the investment process. The firm’s lineup of fixed income funds has on the whole struggled over the last year, with AXA Sterling Index Linked Bond and AXA Sterling Long Gilt being an exception as both funds fared favourably relative to their peers in the respective Morningstar categories.
Asset Management Firm Launches UK Repossessions Fund
Property First Asset Management has launched a closed-end fund that will acquire UK residential and commercial property which has been repossessed or is under the threat of repossession. The management of the UK Property Recovery No. 4 fund will work with banks, building societies, auction houses, liquidators, receivers and professional introducers. This is in addition to distressed sellers requiring a quick sale. The fund requires a minimum investment of £20,000 for private equity investors and £5,000 for SIPP and SSAS investors.
