The desire to join an asset manager that was ahead of regulation and with no “broken” funds is what drove star fund manager Adrian Gosden to GAM to launch a new UK equity income fund, he has told Money Marketing.
Gosden joined Zurich-headquartered GAM in London last month after 13 years at Artemis where he managed the £6.4bn UK Income fund with Adrian Frost, among other mandates with total assets of £10bn.
Gosden, who has also become investment director at GAM, has launched his new fund on 27 October. It will be available on platforms from 6 November.
Speaking to Money Marketing, Gosden says he preferred starting the fund from scratch in a firm that was Mifid II-proof rather than joining a more established player.
He says: “GAM is a name I knew nothing about. They didn’t have a UK equity income fund before. When I started to speak about the opportunity, people only knew the name of Woodford or Schroders for UK equity income so this is exciting for me.”
GAM, which currently manages around £112bn in assets, launched its first three products for UK retail investors earlier this year covering European and emerging market equities and global credit.
Gosden says: “[After I left Artemis] I was offered roles at places to mend things that were broken. That’d have been more lucrative, but the point is that you’d have been lying to someone, as they were things I didn’t believe in.
“Broken in terms performance and positions in the funds that they didn’t want to hold anymore but couldn’t sell because the fund was too big.”
GAM has recently announced it will pay for external investment research itself following the new Mifid II rules. While most of the research is done in-house, Godsen says external resources will cost the firm “tens of thousands” a year.
He says: “GAM is on the front foot of regulation. It has been thinking about these issues for years and that is a positive cultural thing. You’ve got to go where your clients are and not hold on to the past. That is the wrong approach and that’s what I was thinking when I wanted to launch this equity income fund.”
Launching at the right time?
The GAM UK equity income fund, which will be co-managed with Chris Morrison, has been seeded by GAM with £10m and with a large sum of Gosden’s money and other backers’ it will be £30m at launch.
Initially, the fund will hold 50 shares with a minimum market capitalisation of £100m and will allocate 50 per cent to large caps and 50 per cent to middle and small companies.
Gosden says the fund he was managing at Artemis was much more weighted towards large caps, while in the top 10 holdings of the new fund only two stocks are in the FTSE 100. Details on the holdings will be revealed to clients at the end of November.
The fund has a value-bias and will initially target financials, oil, consumer and industrial names.
Gosden expects the fund to have a turnover of 40 per cent and a holding period of two and a half years.
He says: “The interesting thing is that we just had the third quarter results from companies so the portfolio is really up to date. We also had a lot of profit warnings so when you get at this stage of the year, management always look towards that finishing line and they put out their statements so I am quite happy to be launching at this stage when we had all that fresh information.”
The fund is domiciled in the UK and at launch it will have an annual management fee of 0.75 per cent with an estimated ongoing charge figure of 0.88 per cent.
The UK Equity Income sector accounted for 6.1 per cent of all UK funds under management as of March, according to research by Hargreaves Lansdown.
Shore Financial Planning director Ben Yearsley says Gosden might find it hard to attract investors to his new franchise as the UK equity income sector is overbooked. He also questions the pricing.
He says: “The problem for Adrian is that there are many core equity income funds with long term records to choose from, not least his previous fund Artemis Income. Will investors leave that fund for the new one? Honestly, I doubt it. The question them becomes how good is GAMs distribution team at selling Adrian to the wider market.
“A second issue is seeing how Adrian and Chris gel – what looks good on paper doesn’t always work in practice and potential investors may want to give this new partnership time to bed in before committing money. Finally, they could have done more on cost, it’s middle of the road on that when there are some good cheaper funds available.”