IT’S BEEN a turbulent year at the top of the fund management industry. In addition to the departure of Neil Woodford from Invesco Perpetual next April, flagship funds at Fidelity, Schroders, Jupiter and M&G have all seen changes of personnel.
In Schroders’s case, the departure of Richard Buxton in March led to a reported £1.5bn outflow from its UK Alpha Plus fund up to August. Morningstar data shows that the discount to net asset value (NAV) for the Schroders UK Growth investment trust, which Buxton also exited, rose from 6 to 11 per cent shortly after. “To many investors, Buxton simply was Schroders in the UK,” says James Bateman of Fidelity. “But by bringing in the highly capable Julie Dean shortly afterwards, they actually managed to mitigate the impact of the exit very well.” Indeed, Morningstar figures show that the discount to NAV for the investment trust subsequently tightened, and is now at a lower level than under Buxton.
“The best successions often secure a level of continuity in investment strategy,” says Bateman. “Investors should not just react with a knee-jerk sale when a star manager leaves.” Fidelity’s Special Situations fund is a case in point. Sanjeev Shah (who himself replaced the legendary Anthony Bolton at the reins of the £2.9bn fund) will step down in January 2014, to be replaced by Alex Wright. But the two have run the fund together since September to ensure a smooth transition.
Simon Evan-Cook of Premier Asset Management says that this should help the fund “hang on to most of its assets, perhaps even allowing them to grow.” Wright’s returns of 46.3 per cent from September 2012 to the end of July 2013 managing the Fidelity Special Values fund – compared to 22 per cent for the wider FTSE All Share index – will likely give some investors reason to keep faith.