Tory MP Sir Jacob Rees-Mogg’s boutique fund management house Somerset Capital is set to wind down after suffering substantial redemptions and the loss of its biggest client St James’s Place, the firm announced today.
The emerging markets specialist, which was dropped by wealth manager St James’s Place last week as part of its drive to lower fees, said today it is looking to offload its top performing funds to ACD but would close its wider institutional business in London.
“It has been a privilege to manage capital for world-leading institutions and clients for over 16 years,” said Oliver Crawley, a partner at the firm. “I am incredibly proud of all we have achieved in that time through the hard work and skill of our dedicated team.”
Bosses said the firm’s UK funds, including its Somerset Asia Income Fund and Somerset Emerging Market Dividend Growth Fund, along with their key investment teams, are now “seeking to transition to a new investment adviser”.
Somerset’s assets under management cratered from around $3.5bn (£2.8bn) to $1bn (£0.8bn) in recent weeks after St James’s Place dropped the firm from two of its emerging markets funds, in a move triggered by regulatory pressure on the wealth manager to simplify its fees.
The decision to shut Somerset Capital marks the end of the road for the fund manager, which saw its assets under management peak at $10bn (£8bn) in 2018. It reportedly rebuffed a bid of up to £90m from rival Artemis Investment Management.
Somerset was founded in 2007 by Rees-Mogg, Edward Robertson and Lord Dominic Johnson, who previously worked together at Lloyd George Management, an emerging markets fund manager.
The MI Somerset Global Emerging Markets Fund, managed by Edward Robertson, is down 4.5 per cent year-to-date. It lost 16.4 per cent in 2022 and 10.8 per cent in 2021.
Rees-Mogg has become a household name in recent years due to his prominent role in the Brexit campaign and later as a government minister.
Since leaving the front-bench he has also launched a media career, hosting his own show on the TV channel GB News. Lord Johnson currently serves as the government’s investment minister.
The wind-down shows the ramifications of regulatory pressure on wealth managers under the FCA’s new consumer duty, which require firms to show they are delivering good outcomes for consumers.
Britain’s biggest wealth manager St James’s Place has already committed to scrapping a controversial exit fee on some of its products and said earlier this week that Robeco Institutional Asset Management would take over two of its emerging markets strategies from Somerset.
St James’s Place said earlier this week the move would cut fees 0.30 per cent to 0.15 per cent per year.