Chartwell Investment Management is recommending its clients consider switching to an alternative Eur...
Chartwell Investment Management is recommending its clients consider switching to an alternative European growth fund following the appointment of an unknown name in the retail market to manage DeAm's renowned 'Peter Young' fund.
Deutsche Asset Management have announced that David Haysey will be taking over the running of their European Growth Fund, which was previously involved in a city scandal when in the hands of fund manager Peter Young.
Young artificially boosted the performance of the Morgan Grenfell European Growth Fund by investing in unquoted companies that he himself had established, forcing Deutsche Bank, owner of Morgan Grenfell, to channel several hundred million pounds into the fund to compensate investors.
Even though the fund is now back on an even footing and investors have stayed with the fund, says Patrick Connolly, performance has been relatively unexciting under the command of James Anderson so Deutsche has moved its targets and now requires Haysey to outperform its benchmark by 4% rather than 2%.
"Bearing in mind the stigma attached to this fund and the poor performance in recent years it is surprising that there is still £315 million under management," says Connolly.
"Investors will want improved performance, but will they be happy with increased risks within the fund in order to achieve this?
"The new fund manager has never managed a retail fund before, and there must be some doubt as to whether he can turn around the performance," he continues.
"Investors have been very patient with this fund, though may now wish to consider a switch to the HSBC European Growth Fund, for example, if they are not happy with the extra risks now involved."
Responding to Chartwell's comments, Paul Dellar, head of Deutsche's product management, UK retail says:
"In terms of the risk associated, we should get things into perspective. Even with the increased risk added to this fund, we are still relatively low risk, as are all our products. We have done back testing and feel the increased level of risk is necessary in order to make the fund competitve against its peers. All we have done is increase that risk to a level comparable with all our other retail funds," says Dellar.
"As for the appointment of Haysey, his experience is in running European equities, so regardless of whether it is for institutional or retail assets, he has the experience necessary," he adds.
Partner Insight: For Blackfinch, the arrival of its IHT portfolio services was a 'natural evolution' in the group's offering and points to an established track record of returning cash to investors.
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