Two fund managers moving on

A couple of funds on our Foundation Fundlist have seen some announcements of personnel changes in recent weeks.

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  1. Rob Morgan

When a fund manager leaves a fund, it is important to review the holding to check it if the investment case remains intact. To us it’s not an automatic ‘red flag’. Many funds are run by a team and have a well-defined and disciplined process, and the quality of these can be more important than any single individual.

Often it is the deputy manager of the fund that steps up as replacement, or at least another member of the same team with good knowledge of the stocks in the portfolio and who is well versed in the investment approach. This tends to provide a relatively seamless transition. In other, possibly rarer cases, where there is considerable emphasis on the one individual’s managerial flair, it does change the investment case significantly.

Here are our views on two funds on our Foundation Fundlist that have recently seen changes at the top.

BlackRock European Dynamic

BlackRock recently announced that Alister Hibbert will step down from running the fund and that his co-manager Giles Rothbarth will be taking over. The fund is a longstanding member of the Foundation Fundlist and has provided strong returns for investors under Hibbert’s stewardship. We have remained impressed thus far this year as it recovered strongly from the stock market lows in March.

While it is disappointing to see Alister Hibbert step aside, he leaves behind a very capable and highly resourced team, so we are not taking any action to remove the fund from the list at present. With Mr Hibbert spending more of his research time on his global funds this is a natural progression and having spoken to the two managers our Collectives Research Team feel comfortable that the fund will continue to be managed in the same focused and pragmatic way.

There are no anticipated changes to the strategy or approach. The team behind the fund operate a research-intensive process that targets companies which can create value for shareholders by understanding the resilience of business models through the economic cycle and then identify change that could drive future earnings and cashflow.

Giles Rothbarth joined BlackRock in 2010 after graduating and in February 2019 was formally recognised for his contribution to the fund by being promoted to named manager. While there has been some turnover in BlackRock European team in the past few years, we are encouraged that there has been no deterioration in terms of the skills and quality.

Man GLG Japan Core Alpha

Stephen Harker, lead manager of the Man GLG Japan CoreAlpha Fund, and senior portfolio manager Neil Edwards are to step down at the end of March 2021. Jeff Atherton, who also currently serves as senior portfolio manager, will take over the lead manager role and continue to be supported by Adrian Edwards and assistant managers Stephen Harget and Emily Badger.

Stephen Harker will remain in an advisory capacity for one year from next March, so we anticipate an orderly handover of responsibility. We also consider Jeff Atherton a natural successor having been heavily involved in the running of the fund since 2011. The team will continue to implement the same longstanding investment process and display a strict adherence to contrarian ‘value’ investing. This involves buying shares in large Japanese companies they believe are valued significantly less than the ‘sum of their parts’ and patiently waiting for a ‘fairer’ valuation to emerge. When they feel the recovery is complete, or a better opportunity presents itself, they sell and move on to the next opportunity.

We consider the team’s established and fairly formulaic approach to be disciplined and repeatable, so we don’t think the retirement of two senior members of the team means any major alterations to the fund or spells any immediate concerns for investors. We still believe the fund is of a high quality, and what will be most influential to returns is the relative performance of the deep ‘value’ style they employ, which has been struggling for much of the past decade versus more growth-orientated parts of the Japanese market. We will continue to monitor the fund and speak with the new manager – and we will let investors know if our view changes.

Past performance is not a reliable guide to future returns. This website is not personal advice based on your circumstances. No news or research item is a personal recommendation to deal. Investment decisions in fund and other collective investments should only be made after reading the Key Investor Information Document or Key Information Document, Supplementary Information Document and Prospectus. If you are unsure of the suitability of your investment please seek professional advice.

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