Fund Times: 23 - 27 February
Star manager Elmasry to leave Morgan Stanley; Another wave of absolute return fund launches; UK funds assets under management slump 2%.
Star manager Elmasry to leave Morgan Stanley
We can now disclose that Hassan Elmasry, one of the best managers his field in our view, is leaving Morgan Stanley at the end of April to start his own money management firm in London. Elmasry and his team currently run Morgan Stanley Global Brands in the UK, and clones of the same fund domiciled in the US, Australia, and Luxembourg, along with US equity versions of the strategy that are sold in that market. We've covered Elmasry for many years and believe his loss will be a blow to the funds and the firm. Elmasry's funds' records speak for themselves. He took over as lead manager in the group when Andrew Brown departed in April 2002. Over the past five years, his funds have delivered more than triple the return of the MSCI World index. You can read more on this here.
Argonaut Capital launch European Absolute Return fund
Argonaut Capital has launched a European absolute return fund, Ignis Argonaut European Absolute Return. 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 and just having the name is not enough. The fund won't come cheap--it carries a 20% fee on performance in excess of 5%. The fund’s initial charge stands at 5.25% and it has an estimated TER of 1.55%.
Running the fund will be Barry Norris, manager of Ignis Argonaut European Alpha fund, and he will be assisted by Oliver Russ who currently runs Ignis Argonaut European Income fund. Norris’s performance on board his fund has been exceptionally strong -- over his tenure (May 2005 – present) the fund returned 7.3% per year in annualised returns while his average peer delivered a meagre 0.8%. He also provided investors a relatively smoother ride. Russ’s record is also favourable relative to peers – his fund shed 3% per year annualised since he took the helm in January 2006, versus a 4.4% loss for its average peer.
SVM to launch UK Absolute Alpha fund
Edinburgh based SVM Asset Management has also announced its plans to launch an absolute return fund, SVM UK Absolute Alpha. The fund will launch next month and will be run by Colin Mclean, who already runs an absolute return mandate, SVM Saltire and has a long record running long/short mandates. The firm has run long/short mandates since 1992.
Blackrock launch European Absolute Return fund
Blackrock also launched a European version of Mark Lyttleton’s UK Absolute Alpha today. Vincent Devlin will manage the fund. Devlin and seven of his colleagues, including team head Nigel Bolton, left SWIP for Blackrock in early 2008. He currently manages Blackrock Continental European, which he took over upon joining Blackrock from SWIP. Although it’s early days for Devlin on board the fund, his performance since taking charge has been impressive. The fund shed 21% while its average peer in the Morningstar Europe Ex-UK Large-Cap category lost a larger 27% of its value.
Absolute return funds have become especially popular recently as investors try to combat market volatility. However, we have some degree of concern that investors may not understand the complexity of the funds and the risks that may be embedded in their portfolios.
UK funds assets under management slump 2%
UK domiciled funds' assets under management fell by 2% between December 2008 and January 2009 to total £354 billion according to the latest figures from the IMA, the trade association that promotes the business interests of UK asset managers. This contrasts with the 7% surge between November and December last year and reflects the ongoing volatility and negative sentiment in the market. The same pattern held true for overseas funds which witnessed a higher drop of 5%. These figures also represent declines of 18% and 6% from January 2008 levels for UK and overseas funds, respectively.
Net sales of UK domiciled equity funds dropped £977 million and were offset with a £967 million increase for fixed-income offerings in January 2009. The IMA Sterling Corporate Bond sector was the best selling sector overall for UK domiciled funds for the third month running, and IMA Europe ex-UK the worst.
