retail fund range taken under ISis banner as part of £240m FIS deal
RSA Investments' retail fund range is to be rebranded under the Isis banner.
The move will take place as part of the £240m deal in which Friends Ivory & Sime (FIS) becomes the investment manager for the UK life assurance and general funds of the RSA group for an agreed 10-year period.
Isis was launched as a brand last August when FIS acquired the Friends Provident retail funds business.
As part of the merger, the RSA Investments and FIS investment teams will be integrated into one office in London.
Howard Carter, chief executive of FIS, said: 'We will be based in Wood Street, where FIS is at the moment. RSA will move from its current premises in Broadgate.
'Doing this will make the business work effectively. It makes sense to have all your managers and systems in one place.'
While Carter has stated his preparedness to rationalise where overlaps exist between the two organisations, he believes the two businesses complement each other.
Combining the investment styles of FIS and RSA is not seen as a problem by Carter, who said the fit between them is one of the main reasons for buying the RSA business.
FIS has a growth-oriented approach to investing and, as such, a number of its funds, particularly the Friends Provident UK range, have suffered over the past two years in value-oriented markets.
Within the UK All Companies sector the Friends Provident Equity, Friends Provident FIS UK Mid Smaller Companies, Friends Provident UK Focus and Friends Provident UK Growth funds are ranked 259, 270, 263 and 261 respectively over one year to 1 April 2002, offer to bid with net income reinvested.
Carter pointed to FIS's strength in smaller companies and the Aim market as key elements in its UK offering.
RSA is also a growth investor but invests in a much broader range of assets and is known for its particular strength in bonds and equity income, as well as having decent performance in the Far East and Europe.
Carter said that with the £27bn FIS will now possess in fixed income, it should be able to put forward a strong bonds team.
The Royal & SunAlliance High Income Bond is ranked 11 out of 60 in the UK Corporate Bond sector over one year, returning 9.13% compared to the sector average 6.23%, on an offer to bid basis.
Similarly, the Friends Provident High Yield Bond is ranked three out 41 in the UK other bond sector, returning 2.35% compared to the sector average -3.71%.
Despite the integration, Carter said a key element to building up the group will be retaining the top quality managers at FIS and RSA and then recruiting externally.
One of the best retail names within RSA's range is Mike Felton, manager of RSA UK Prime, a focus fund that has outperformed both the sector average and Friends Provident's UK Focus portfolio, returning 4.57% bid to bid over the three months to 1 April.
Carter added: 'The platform we will have will make us attractive to other managers, if and when we need them. We want to produce an excellent range of products with top quality managers and excellent service. With the acquisition of RSA, we will be in a much stronger position to provide this.'
The conditional agreement with RSA Investments to acquire the business will give FIS £35bn in equities, in addition to the £27bn in fixed interest assets. The deal will effectively double FIS's funds under management from £34bn to £70bn.
The acquisition of RSA will also bring FIS's commercial property assets up to £4.5bn. Carter sees this as a platform for the group to develop a third-party business in this asset class.
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