multimanager takes an industry perspective to the abn amro-artemis saga
Equity markets may be volatile but they hardly match the ups and downs and twists and turns of the unfolding ABN Amro-Framlington-Artemis saga.
Investors in ABN Amro's UK range have faced a 'hold' or 'sell' dilemma following the news that star managers Nigel Thomas and George Luckraft were to depart the group. Since the initial announcement in April that the pair were to join Framlington but would continue to run their portfolios until replacements could be found, the plot changes have come thick and fast.
MultiManager has been running an ongoing survey of a range of fund of fund managers, responsible for £2.5bn in assets, to see how their strategies towards ABN's UK fund range have changed over the past two months.
In May the pair departed for Framlington, court action loomed and Thomas and Luckraft were put on gardening leave, leaving ABN without any high profile managers. Then, in June, ABN announced a merger deal with Artemis Investment Managers, with the resulting business operating under the Artemis name.
Most of the managers that MultiManager spoke to said their initial view was to hold onto the funds but in the light of Luckraft and Thomas's departure on gardening leave they changed this assessment to a sell.
Mick Gilligan, associate director of fund research at Killik & Co, said that even after Thomas and Luckraft announced their intention to leave ABN Amro he initially viewed the UK Select Opportunities fund as a hold.
He added: 'Nigel Thomas was heavily committed in terms of his own capital, and I knew he would do everything he could do ensure continuity. However, Thomas going on gardening leave is the worst thing that could have happened, and performance has come off a bit.'
Gilligan then recommended selling the fund, and interestingly his suggested replacement was the Artemis UK Special Situations fund.
Since the announcement that a merger with Artemis is to go ahead Gilligan sees ABN Amro's funds as a hold, even though there is no information on which, if any, of the two groups' UK funds are merged.
He also said that ABN Select Opportunities and Artemis Special Sits are not that different so a merger is a distinct possibility.
Mark Harris, head of investment management at Edinburgh Portfolio (EP), who runs £360m in its funds of funds, had a £12m holding in ABN Amro's UK Select Opportunities fund at the time of the first announcement of Thomas and Luckraft's intention to leave. Harris sold between £2m and £3m immediately.
'As I expected the rate of decay in performance to be fairly slow, I kept an eye on the situation, to see how much of an impact the announcement would make,' he said. 'I also checked if other people were redeeming their holdings.'
Harris continued selling down his holding, putting the bulk of the money into Fidelity Special Situations and GAM UK Diversified. 'On the day before the legal wrangling was announced, I held between £1.5m and £2m in the fund. The following day I pulled out the last of these assets,' he said,
Gary Potter, director of multi-manager and fund of funds at Credit Suisse Asset Management (CSAM), had been looking at ABN Amro's High Income fund for around 18 months, and classed it as 'a definite reserve candidate.' He also had a holding in the UK Select Opportunities.
He said: 'Shortly after their resignations, we rescored the fund and the scoring took a bit of a hit. We decided we needed to change our tactics to respond to this.'
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