By James Thorneley M&G will be the dominant partner when its investment team is merged with that of ...
By James Thorneley
M&G will be the dominant partner when its investment team is merged with that of Prudential Portfolio Managers.
Many of Prudential's funds will be turned over and managed in the same way as similar M&G portfolios. Vivian Bazalgette, chief investment officer at M&G, said that there would be no fund mergers between Prudential and M&G for the foreseeable future.
The merged investment team will be led by Bazalgette as chief investment officer. He will be supported by John Betteridge as head of internal funds and asset allocation, Sam Morse as head of equities and Simon Pilcher as head of fixed income. Betteridge and Pilcher held the same the positions at Prudential and Morse was in the same role at M&G.
Within the equities team Greg Kerr will be director of specialist global equities. Duncan Wiltshire, Prudential, and Charles Glasse, M&G, who currently lead the respective European teams have decided to leave to pursue other interests. Susan Smith, manager of M&G European, is to become director of European equities. Neil Pegrum will be director of smaller companies (UK).
The merging of the two teams has alos brought about fund management changes for M&G's unit trusts. Within the fixed interest team Anna Lees-Jones is assuming responsibility for the M&G Corporate Bond fund, taking over from James Gledhill, who will continue to manage the M&G High Yield Corporate Bond fund. Richard Hughes, who recently assumed responsibility for the running of the M&G Equity investment trust, is passing on the management of the M&G Recovery fund and the M&G Recovery investment trust to Tom Dobell.
Nick Train is leaving M&G and is believed to be looking to set up a fund management boutique with Mike Lindsall who used to work with him at INVESCO. He is handing over the management of the M&G Capital fund to Tim Daniels and the M&G International Growth fund to Graham French.
Michael McLintock, chief executive of M&G Securities, believes there will not be any significant changes with how the two funds are run with the departure of Train, who was a theme driven manager. He said that both Daniel's and French have worked alongside Train since he joined the group in 1998. The combined European asset management business will be known as M&G and will manage funds worth some £100bn, out of total group worldwide funds under management of about £150bn.
McLintock will be chief executive of the combined business. Some 30 members of the 40 strong investment team will come from M&G. McLintock believes there should be no problems managing this amount of funds. He said: "Within the £100bn total are two huge life funds, Prudential Life and Scottish Amicable Life. Both have fairly low turnovers."
Prudential's investment approach has remained value oriented while M&G's has changed in recent years from being a fairly strict value approach to a more pragmatic style, according to Bazalgette.
He said: "M&G used to concentrate on high yielding stocks, smaller companies and recovery companies which was successful in the 1980s and for 18 months after the UK's exit from the ERM in 1992. The problem was inflation fell and the kind of companies we were investing in found it difficult to grow earnings in a low inflationary environment."
He added that technology companies were gaining market share quicker than before and competition globally was intensifying. The investment style of M&G was redesigned with neither a growth nor value slant.
A quantitative scoring model was introduced which allowed managers to score companies in terms of turnover growth, market share and management among other factors. Sector coverage was also established where members of regional teams followed individual sectors. Bazalgette said Train's departure and the move to manage Prudential's life funds has no bearing on M&G's investment style.
Last week Prudential issued its first quarter new business figures. M&G sales were £317m, down 34% on the same period last year. The previous year saw exceptional levels of corporate bond fund sales, where M&G has established a strong reputation.
The last quarter saw highly concentrated fund flows into a small number of technology funds. The group's equity fund sales are the highest for five years. Prudential's IFA business in the first three months of 2000 was up 21% to £1.2bn, reflecting strong sales of pooled pension funds.
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