HSBC’s decision to select US private investment firm GMO to run around 40 per cent of its equity income portfolio has surprised many advisers.
HSBC began to switch its £2bn core UK equity income funds away from its active fund management unit Halbis to a multi-manager approach last week. The move has led to the departures of UK income and growth fund manager Bob Morris and income fund manager Chris Rodger.
GMO has a relatively low profile in the UK retail market but will adopt a core strategy for the £1.1bn UK income and growth fund while Edinburgh Partners will run a value-based opportunities strategy and Swiss boutique Mirabaud will run a concentrated alpha strategy for the fund. The £444m income fund will be run by GMO alongside Edinburgh Partners and Walker Crips. The third fund in the range, monthly income, is transferring to quant specialist Sinopia.
Hargreaves Lansdown senior investment manager Ben Yearsley says: “GMO is an interesting choice. It will run around 40 per cent of the portfolio and I know nothing about it.”
Bestinvest head of communications Justin Modray says: “It is a tad surprising that as a global group it does not have the investment resources in house. It spends millions on advertising, saying local knowledge goes a long way, but clearly it does not in this case.”
HSBC Investments head of wholesale Andy Clark says: “We are looking for global bestin-class managers and they do not just exist in the UK. We have chosen very specific managers for very specific jobs.
“We have a track record with choosing Davis Partners for our US growth fund and that fund’s performance has doubled in a year.”