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IFAs question Old Mutual European strategy switch

IFAs are casting doubts on Old Mutual&#39s new strategy to turn round the fortunes of its European fund following the departure of its previous management team.

Last week, Old Mutual disbanded the team running its European fund after lead manager Adrian Farthing persisted with TMT stocks with the fund languishing in the performance charts.

It replaced the team with another equity division headed by David Ross who, in addition to several retail funds, manages Old Mutual&#39s institutional Fairburn European fund.

But IFAs cast doubt over Ross&#39s investment process, pointing out that his institutional fund&#39s performance would drop from second to third quartile for the last two years if standard retail charges were factored in.

As the fund he will take over will be subject to the same investment process with higher charges – his institutional fund charges just 0.6 per cent a year compared with the retail fund charge of 1.5 per cent – IFAs are concerned that he will fail to improve performance.

Bates Investment head of research James Dalby says: “Old Mutual has tried to put a positive spin on the change but once retail charges are added to the performance of the institutional fund, you can see it has underperformed.”

Old Mutual director of retail and institutional sales Andrew Lightbown says: “The institutional fund has had risk controls imposed on it. We will widen these controls for the retail fund to take into account the extra charges.”


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