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Rathbones folds Blue Chip mandate into Carl Stick fund

Rathbones will be merging its Blue Chip Income & Growth fund into Carl Stick’s £1.3 billion Income fund.

Rathbones folds Blue Chip mandate into Carl Stick fund

Rathbones will be merging its Blue Chip Income & Growth fund into Carl Stick’s £1.3 billion Income fund, Wealth Manager can reveal.

The £58 million blue chip fund has been run by Alan Dobbie since 2012. Rathbones Unit Trust Management’s chief executive officer Mike Webb said that the decision was taken because they felt the fund ‘was not resonating with the investor base’.

Subject to a unit holder vote, the merger will take place on 5 October.

As part of the changes, Dobbie, who has been working with Stick for the last 10 years, will be appointed as co-manager of the income fund.

Webb explained: ‘The market found it difficult to distinguish between the two funds, having similar objectives.

‘The blue chip fund was more concentrated and we were finding the volatility of performance, because of the concentration of the fund, meant that people never really engaged with it.’

Although he admits the blue chip fund struggled with performance over 2017 and the start of 2018, he said this was not the driver behind the decision to merge. He added that the move will ensure the funds still have relevance. 

Over the last year the blue chip fund has returned -8.4%, compared to a sector average of 5%. Over three years it was up 11.8% while the UK Equity Income sector average was up 21.9%.

The way the income fund is run will not change as a result of the merger, as Webb pointed out that there is already a lot of cross-over in stock between the two funds.

Investors in the blue chip fund will also benefit from a reduction in OCF from 0.84% to 0.79% on the income fund.

Webb (pictured) added: ‘The blue chip fund was launched in 1989, the income fund was launched in 1971. Over that period of time the [blue chip] fund has never really changed in size that much, other than through investment performance.

‘We look at [our funds] all the time to make it relevant to the market place.’ 

Over one and three years the Income fund has returned 1.4% and 24.5% versus the sector average return of 5% and 22.1% respectively. 

The blue chip fund was previously co-managed by Rathbones' chief investment officer Julian Chillingworth. He took a step back from managing the fund to focus on strategic oversight, back in 2016, handing the reins over to Dobbie. 

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Related Fund Managers

Alan Dobbie
Alan Dobbie Average Total Return:
8.69%
78/91 in Equity - UK Equity Income (Performance over 3 years)
Carl Stick
Carl Stick Average Total Return:
15.14%
54/91 in Equity - UK Equity Income (Performance over 3 years)
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