By Robert Stock Investec is looking to trim its range by some 20 funds by the end of the year. ...
By Robert Stock
Investec is looking to trim its range by some 20 funds by the end of the year.
Since the arrival of Jamie MacLeod as managing director two years ago the group has embarked on a strategy of rationalising a large and unwieldy product range.
MacLeod said: "We have too many funds, which is overflow from the old days where part of the strategy was to generate new fund flows by launching new funds. That was trimmed a few months back but I am planning to trim another 10 or so funds this summer and a further 10 or so before the end of the year."
The main part of this consolidation will come when Investec moves to convert its unit trust range to Oeics, which is likely to happen later this year.
Between the unit trusts and three offshore ranges, the group has some 60 funds. The offshore ranges are: the Investec Global Strategy Fund (a Guernsey-domiciled authorised collective investment scheme with 28 funds); the International Accumulation Fund (an open-ended Guernsey investment company with 10 funds); and Select Funds Plc (an open-ended Dublin investment company with four funds).
Many of the funds are either very small or closely resemble other funds.
The redefinition of the group's range has been part of a year-long process of reorganisation, the development of a new investment process and the recruitment of a number of fund managers.
The consolidation began this week with the launch of two new funds within its Dublin-based Investec Select Funds umbrella, into which existing global equity and global bond funds have been merged.
In an early step in the consolidation process, Investec has received unit-holder approval to transfer the assets of its $290m Global Equity and $148m Global Bond sub-funds on its Dublin-based International Funds platform into the new vehicles.
The transfer has increased the assets under management within the Investec Select Funds umbrella from $50m to $489m.
Investec wants its Dublin-based range, which incorporates the Indian Equity Fund, Greater China Fund, Global Technology Fund and Wireless World Fund, to become its flagship product for expansion into Europe.
MacLeod said: "Up until now, we have focused on distributing our funds in the UK, South Africa and Hong Kong and other offshore territories. To meet our ambitious growth targets, we are putting a concentrated effort into developing our existing Ucits platform to significantly boost our product offering in Continental Europe.
"We have built a strong distribution team capable of gathering assets across Europe. We are transferring two existing flagship funds into the range, a global equity fund, managed by Investec's head of equities Nick Mottram, and a global bond fund, managed by head of fixed income Paul Griffiths, former manager of the AAA-rated Invesco GT Global Bond Fund.
"These new funds will considerably broaden the vehicle's scale and appeal and we will seek to broaden the range further in the future."
MacLeod believes the best way to build up Investec's business, both in the UK and offshore, is by creating quality track records on products rather than by relying on a high level of launches, a strategy favoured by Guinness Flight, the business Investec bought in the UK.
MacLeod's strategy in the UK retail market is to target the UK's top 200 brokers and suppliers, including the networks and fund supermarkets, although he is strong in his support only for supermarkets that support the IFA.
By targeting the top 200, MacLeod hopes to gain size rapidly, although he is realistic that fund performance is the key for endorsement by fund of fund managers and brokers such as Hargreaves Lansdown.
While the group is better known as an institutional manager than a retail one, despite the changes implemented, it does not intend to grow itself in the short term as a large retail brand or Isa and Pep manager.
In line with this emphasis on performance, Investec's investment processes have been overhauled and there have been big changes of investment personnel, with many managers having been replaced. MacLeod estimates that about half of Investec's funds have different managers to when he arrived.
Almost the entire marketing and sales team has been replaced and there are few survivors from the period prior to MacLeod's arrival from Scottish Widows in January 1999, although he said each was given the chance to show they could perform.
Nick Mottram has been recruited from Schroders as head of global equities, as well as a team of seven UK fund managers including Michael Rimmer and Jeremy Rigg, to rejuvenate Investec's UK capability. The team runs the UK Opportunities and UK Blue Chip unit trusts, which are among the most popular broker-recommended funds offered by the group.
Over three years to 21 March, UK Opportunities is ranked 105 out of 239 funds in the UK All Companies sector, based upon returns of -0.5% on an offer to bid basis.
Over one year, the performance of the fund has improved and despite a fall of -4.9% it is ranked 19 out of 292 funds, which had returned an average of -16.6%.
On the fixed interest side, an area in which Guinness Flight had established a strong reputation, Griffiths joined as head of fixed interest, followed by Michael Markham, also from Invesco.
Griffiths heads up a number of Investec funds, such as the Investec GF European Bond Trust and the Sterling Bond Fund. Investec also plans to make Markham, who like Griffiths has run Standard & Poor's AAA-rated funds, the lead manager on a number of funds later this year.
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