Fund to be renamed Edinburgh Portfolio and retain London offices and staff
Edinburgh Fund Managers will run Portfolio as an autonomous organisation following its £12m purchase of the multi-manager funds group.
While the operation will be rebranded Edinburgh Portfolio, it is to retain its own investment approach, London offices and the bulk of its staff.
Edinburgh already has a fund of funds capacity, with assets of £130m, headed up by Harry Morgan. This will continue to be run separately although Morgan will join Portfolio's investment committee. He will be a replacement for David Fischel, managing director of Liberty, the previous owners of Portfolio.
Brian Talbot, managing director of Portfolio since the death of Tim Miller last year, said he and Morgan would work together to integrate and refine the processes by which the funds of funds are run.
The core of the combined process will remain the Portfolio investment committee chaired by Talbot, which operates asset allocation neutral and broadly style-neutral portfolios, selecting funds from research provided by external consultants IMS, headed up by Richard Timberlake. IMS also provides research to the Lazards multi-manager product, following the departure of John Chatfeild-Roberts and his team to Jupiter earlier this year.
Portfolio has taken £14m of net sales so far during what Edinburgh chief executive Ian Watt described as a time of difficult market conditions in which investors have seen returns on many funds turning negative. Watt said that indicates Portfolio had an enduring appeal which Edinburgh will not risk damaging.
The acquisition takes multi-manager assets of Edinburgh to more than £300m, achieving what Watt described as critical mass, and significantly, also takes Edinburgh's Oeic and unit trust assets to more than £1bn, a business dwarfed by its investment trust business which, at 31 March this year, represented £3.9bn of the group's £7.7bn under management.
Watt, who joined Edinburgh 15 years ago as a Japan and Asia fund manager, said the cost of the deal, which represents around 2.4% of funds under management, could rise by up to a further £8m, depending on sales over the coming 12 months.
Watt said the deal was good value as the market was currently valuing unit trust assets at around 9% of funds under management and Portfolio would be earnings enhancing for Edinburgh in the first year.
Another aspect of the deal that Watt said was highly important to Edinburgh was that Portfolio operates one of a very limited number of retail property funds investing in direct property. The fund, an £84m unit trust of property and property shares, is managed by Liberty, an arrangement that will continue.
Watt said that like Edinburgh's purchase of Northern Venture Capital last June, the acquisition of a property fund provides Edinburgh with another area of expertise and a non-correlated asset class, which could be utilised both for retail and institutional clients.
As well as the property fund and the £187m of assets in the nine fund of funds unit trusts, Portfolio also has £157m in authorised pension unit trusts.
The purchase ends around nine months of speculation about Portfolio's future after Investment Week revealed last year that Liberty International Financial Services was looking to divest itself of the group.
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