The company says the change was prompted by a shift in the market from value to growth, rather than the performance of the Artemis fund.
IMS had been holding the quant-based Artemis fund alongside another quant-based fund, JP Morgan European dynamic. Both funds select stocks using computer-based tools, a combination which worked well when value stocks were outperforming.
But indications that growth stocks were starting to outperform led IMS to the conclusion that two quant-based funds forming the bulk of the portfolio’s European exposure was too much. It decided to reduce its exposure to quant-based funds in favour of the T. Rowe Price fund.
The T.Rowe Price fund invests in a concentrated portfolio of 30 to 50 European stocks with no benchmark constraints. This complements the JP Morgan fund as portfolio construction is based on the analysis of fundamentals such as a company’s sales, earnings and dividend prospects, rather than a computer model.
IMS chief investment officer Giles Gilbertson says: “We have had value outperformance for a long period of time but we believe there is an inflection point in the market, with growth starting to outperform.
“Leveraged buyouts are drying up, cyclical companies are not in demand as much and there is a slowdown in the developed world. On that basis, we wanted to have more transparency from fundamentals such as earnings’ growth rather than quants.”