St James’s Place (SJP) has taken BlackRock off an alternatives mandate in a restructure of its fund range.
In total there are three fund changes, which take effect from 30 July 2018. They comprise:
- The manager of the Alternative Assets fund (with assets of £1.2 billion) will switch from Blackrock to Boston-based Wellington Management, with Steve Gorman as lead manager.
- The Continental European fund (£387 million) currently managed by Stuart Mitchell from SW Mitchell, will switch to Ken Hsia from Investec Asset Management.
- Hsia will also join as a co-manager of the Greater European Progressive fund (£1.2 billion) alongside existing co-managers Ken Broekaert of Burgundy and Stuart Mitchell.
- The £3 billion Balanced Managed fund which has been managed by AXA Framlington will be moved to a joint management team of Ben Inker of GMO, which takes 80% share of the strategy, and Mark Baribeau of Jennison Associates, which will take 20%.
SJP also announced two other changes. The team at Majedie Asset Management, managers of the UK & General Progressive and UK Growth funds, will be given additional flexibility to invest up to 20% of its strategy in overseas equities.
The Schroder Managed fund will be renamed the Managed Growth fund for life, pension and international products.
Chris Ralph, SJP's chief investment officer, said: ‘The Alternative Assets fund will look to combine both systematic and fundamental investment strategies across a range of asset classes. As one of the largest investment houses in the world, we believe the multi-asset team at Wellington Management has the resource and expertise to provide attractive returns for investors over the medium to long-term.'
Last year New Model Adviser® analysed how much SJP earns from its unit trust funds compared to the managers running the strategies. In several cases SJP earned much more than the manager.
The Alternative Assets fund was the starkest example. SJP earned 40 times as much as external manager Blackrock (SJP earned £12.9 million compared to BlackRock’s £333,000).
Citywire comment - By Frank Talbot, head of investment research
Why has SJP decided to make these changes?
As always SJP has made good appointments to its funds. Whatever you might think of its charges they do know fund manager talent.
This is particularly true concerning the hire of Investec’s European equity manager Ken Hsia. Hsia’s track record is impressive since taking on the pan European Investec GSF European Equity fund in April 2012 and far exceeds the performance of the St James’s Place Greater European Progressive fund that he is set to co-manage with the existing team of Stuart Mitchell and Ken Broekaert.
Over the past five years alone Hsia has generated returns of 86.8% for sterling investors in his Investec fund versus Mitchell and Broekaert’s 56%, which is just a shade higher than 55.9% return made by the MSCI Europe TR index.
The incumbent managers have suffered during the mixed climate for European equites over the past year, generating ninth decile returns of 3.3% (223/262 managers) compared with the index's 7.4% gain and Hsia’s 10%.
What is curious is that Mitchell has done well on the Europe ex UK fund, St James's Place Continental European, and yet he is being replaced by Hsia; this is particularly true over the past year in which he is ranked 22/115 for his 10.5%.
That leads me to believe that Hsia has been drafted in to help with the UK portion of the European Progressive fund that they will co-manage together.
On the Alternative Assets fund, the use of Wellington’s Steve Gorman is a less obvious choice. His returns have been middle of the pack over the past three years in the Alternative UCITS Multi-Strategy peer group, and only a little ahead of the big competitors at Invesco and Aviva. In their defence very few of the these Multi-Strategy products have delivered recently.