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F&C reemerges on IFAs’ radar

A series of high-profile departures sent F&C spinning out of IFAs’ orbit but Matt Davis says fund launches and the arrival of a new UK team have stoked up interest

A year after F&C completed its merger with Isis and following a series of staff changes and strategic manoeuvres, retention of senior managers is going to be key to success for the fund firm.

F&C lost bond manager James Foster to Artemis in September 2004 and UK prime manager Mike Felton to M&G in the same month. Pacific equities team Christian Dangerfield and Kerry Goh resigned. Earlier this month, F&C sacked Derek Mitchell, who had replaced Felton on the UK prime fund, bringing in Phil Doel and his team from DWS to launch a UK opportunities fund.

Critics say staffing problems are indicative of management problems. Lawrence House non-executive director Graeme Sinclair, who was sales and marketing director at Govett in 2001/02 when Dangerfield and Goh were in charge of Pacific money there, says the fact that the pair “came into F&C and walked out the door so quickly suggests there is something in the management there that is really rattling people”.

F&C bought Martin Currie’s private equity business in June, launching the F&C private equity trust run by Hamish Mair. It has also restructured its growth and income funds under Ted Scott and launched a commercial property trust. On a negative note, it lost the mandate to run the F&C Pacific investment trust to Witan in March and this month its emerging markets investment trust was swallowed by its bigger JPMF rival.

F&C head of communications Jason Hollands says: “It did not surprise anyone that we lost the mandates on the two investment trusts but we have done very well in our commercial property launch. Where we have not been delivering, clearly we are doing something and we are now focused on organic growth and delivering investment performance. The recruitment of Phil Doel and his team presents a real opportunity.

“We have a front-office team of 160 fund managers and a fixed-interest team of 40, which is bigger than many firms’ entire operation. A lot of the names that get dragged out were made redundant anyway and, if you look at Dangerfield and Goh, within months of them going we lost the mandate, so put your facts together. The trust’s performance was awful.”

In the six months to the end of June, the firm attracted net retail inflows of 632m into its investment trust business, taking 250m in new investment into its commercial property trust. It also achieved net inflows of 64m into its Oeic business over the period and made strong sales of its Baronsmead venture capital trust.

Alan Steel Asset Management consultant Alan Adam says the firm has come back on to his radar after being off it for some time due to the departures of so many fund managers. “F&C now seems to be reentering the market with more specialist products such as VCTs and private equity but it is not a mainstream play for us since so many good managers have left,” he says.

Hollands says F&C is attempting to offer different things to different parts of the market, without being reliant on one product or proposition. He says the performance of US small-cap manager Robert Siddles, UK equity income manager Julian Cane and growth and income manager Ted Scott has been strong, attracting the interest of discretionary brokers and multi-managers.

Scott’s brother Richard works at Iimia as a senior fund manager. He says the decision of the board of the F&C investment trust to outsource its management to specialists in March was prog- ressive and that it is “never a good idea to bet against that trust for too long”. But he feels the firm as a whole remains in a state of flux.

He says: “Like certain other big firms, I think F&C has been on the back foot for a time, with the integration of two substantial businesses causing problems.” Losing two investment trust mandates was a bad start to the year but the recruitment of the DWS team is a promising sign. It is in a state of transition but, to my mind, there are still other, stronger places to have your money.”

Hargreaves Lansdown investment manager Ben Yearsley says if investors can go to Artemis for UK equities, Jupiter for European equities and First State for emerging markets, they have no need to go to F&C. He says the exception are Scott’s ethical funds. Also, Hargreaves will be advising investors in Doel’s former DWS fund to switch into his F&C version.

Yearsley says: “It is all very well saying it is in a state of flux but it has been for four years since Ivory & Sime merged with Royal & Sun Alliance. There is nothing you have to go and buy from it, with the arguable exception of Scott’s product and Doel’s when he joins. It is an also-ran.”

Hollands responds by saying the Hargreaves Lansdown multi-manager team has been extremely supportive of Scott’s UK growth and income fund and he is surprised by Yearsley’s comments.

Yearsley says: “Hollands has a good point because we do have 9m in Scott’s fund. But he is one of how many managers at the firm?”


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