Each month RealAdviser asks a panel of fund selectors to give their verdict on a company's fund range. This month SGAM gets the once-over
Jason Brittain, manager of the T Bailey Equity Income fund
SocGen has been quietly improving and getting more impressive on its UK and US side. We rate both the Special Opportunities fund managed by Hugh Sergeant and the SocGen UK Growth managed by Hari Sandhu quite highly. The problem is that the UK Growth fund is in a particularly competitive part of the market. It is first quartile, but there are funds above it and it has never done well enough to make it into the UK portfolio.
On the Special Opportunities fund, we like the style. A lot of it is stockpicking and with markets unexciting by historic standards, we think this is a sensible way to invest.
The American Growth fund is a multi-strategy fund. It is similar to the typical directional equity fund from many years ago. It is using SGAM's association with TCW, which is a huge fund manager in the US. It blends a portfolio of four underlying managers and as such as many of the diversification benefits of fund of funds. It should do well over the longer-term. It is a sensible long-term core investment in the US; particularly as the two other major US funds - Gil Knight's Gartmore US Opportunities and Gordon Grender's North American Growth - have not been as successful recently.
Craig Heron, fund of funds manager, New Star
We currently hold the US Relative Value fund, managed by TCW. We brought into it before it became a SocGen fund. It has done very well for us. We like it because it's not just a style fund. There are valuation and sector controls. It has outperformed in lots of different types of markets. It has also proved itself to be scaleable and has grown from $100m a year ago to $800m now. We were big holders of the UK Special Opportunities fund, managed by Hugh Sergeant and Hari Sandhu. We bought in to the fund in August 2003 and doubled its size. We were impressed by the analysis work on stocks and use of discounted cash flow models. We were also aware that they were quite overweight small caps. We held the fund through until the start of this year, but were disappointed that there was no attempt to rotate up the capitalisation scale.
As a group it has changed since its early days. We did not hold any of the UK funds in the Horlick and Seabrook days. The addition of lots of funds from TCW can only give it a better business because it has more of a range. Previously, the UK was the only area it could realistically hope to sell - Europe was not good and the US had been a bit disappointing - so the additional funds are a good thing.
Ben Yearsley, investment manager, Hargreaves Lansdown
SGAM has been pretty good in the US through its Sogelux range of funds, managed by TCW. These funds have generated some decent performance on the whole. Hari Sandhu and Hugh Sergeant have also been good in the UK. Alan Torry on the technology side has been around a long time and knows the marketplace well. That said, technology funds tend to be a bit of a homogenous group in terms of performance and rise and fall as a man.
I think it is now a better organisation than in its Horlick days. She was more of a figurehead than a fund manager. I think the group should have bought its US offering into the UK a bit sooner. It is not cheap to do, but there is not a lot of choice of US funds in the UK at the moment. We have never looked at the group's corporate bond range. I assume if they were great they would have hit our radar.
Paul Kim, research director, IMS
It is a great shame that SGAM lost Stephen Peirce and Paul Rayner on the gilts side. We were using this fund until they left. We switched out because we didn't like the idea of UK gilts being run from Paris. I think the group lacks a leading light now that Horlick has left. It needs someone strong at the helm.
We used to invest in the US fund when it was run by Alan Torry some years ago, but performance tapered off and we sold out. We will be keeping an eye out for the latest fund run by TCW. We do not hold any of SGAM's other funds. The UK is the area you need to break to raise lots of funds under management, but it is a very competitive marketplace.
Bambos Hambi, head of multimanager at Gartmore
Much to the credit of the current management team, the retail operation at SG has been rebuilt somewhat, having suffered the loss of some senior personnel, and is now a business admirably on the road to recovery. With the core UK and US markets underpinned with some strong product offerings, attention is rightly being paid to enhancing other areas of the fund range, with resource having been added where deemed necessary.
We are currently unitholders in the UK Special Opportunities fund, managed by Hari Sandhu and Hugh Sergeant (formerly of UBS) and have also been attracted to the group's US fund range. Both franchises are distinctive in terms of investment process, an ever more popular approach by fund groups that has the potential to be a consistent strong point across the group.
The US fund range has deservedly attracted a lot of attention in recent months. After an innovative reshuffle, UK investors have now been granted overdue access to the skills of US-based TCW. The onshore American Growth fund, now fronted by TCW's impressive strategist Komal Sri Kumar, seeks to leverage the expertise of his colleagues who manage assets across the style and size spectrum.
As always, there is room for further improvement, however. Some areas still suffer inconsistent performance and a lack of stability - it was disappointing to see both Paul Rayner and Stephen Pierce leave the bond desk in recent weeks. However, areas of strength will always attract attention from rival groups.
All in all, there is a strong pool of talent at SG and many areas of the business are worthy of ongoing consideration.
SGAM's Strengths and weaknesses
JUS range managed by TCW has had strong performance, suits all market conditions and has proved itself scaleable.
JUK range has had good performance and stock research skills of Hugh Sergeant and Hari Sandhu are highly rated.
LSome areas still suffer inconsistent performance and a lack of stability - Paul Rayner and Stephen Pierce were strong on the bond side and will be missed
LUK range operating in very competitive marketplace and has as yet failed to reach the very top.
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