High-profile fund manager Richard Plackett retiring from BlackRock could bring a change in investment direction for the UK Special Situation fund, experts say.
Plackett, who worked in the industry for 25 years, has been co-manager of the £1.4bn UK Special Situations fund since 2012 and was former head of the UK Small and Mid Cap equities team at BlackRock.
He will co-manage the fund until 30 September 2015 and will assist with the transition of his responsibilities before leaving the investment manager at the end of 2015.
The firm’s current UK equity portfolio manager and co-head of the UK equity team Luke Chappell will become co-manager of the fund with immediate effect, working with mid and small cap fund manager Roland Arnold.
City Financial investment director Peter Toogood says the “true differentiator” in the fund manager change is that Chappell is more “large cap-focused” than Plackett. “Luke has also been at BlackRock for a long time, he is different from Richard, who is more a small cap expert.”
Since Chappell has traditionally invested in large caps, the fund could go in that direction, adds Toogood, who also highlights that Chappell runs more concentrated portfolios than his predecessor.
Chappell began his career at Flemings in 1990 and managed a mid-cap portfolio from 1994 to 1998 prior to joining Merrill Lynch Investment Managers, where he managed higher alpha portfolios investing predominantly in FTSE 100 and FTSE 250 companies.
However, Toogood praised the new manager’s skills, saying he is “a gifted, sensible and intelligent investor”.
Plackett’s departure follows the exit of another highly-regarded fund manager, Ralph Cox, who left BlackRock in March this year. Cox had taken over as head of the UK small and mid cap team when Plackett stepped down from the role after returning from a sabbatical last October.
Both departures will bring “a fairly significant change” to the team, says Toogood.
“It is a seachange … Ralph and Richard were a team for a long time,” he says. ”The whole point is that there is a big change…The fund will be a different vehicle from here because the two people, Richard and Ralph, worked very closely.”
The UK Special Situations fund has outperformed the Investment Association UK All Companies sector over the year to 21 July, returning 11.8 per cent against an average of 10.4 per cent, according to FE Trustnet. However, it returned 38 per cent versus an average of 48 per cent over three years.
Chelsea Financial Services managing director Darius McDermott says “the flagship fund” has been “a bit disappointing” in the past couple of years, but the longer term performance “is still evident”.
However, Chelsea Financial Services has now downgraded the fund from its ‘buy’ rating to a ‘hold’. Morningstar has also placed the fund under review today. The fund was previously gold rated.
Re-finding the identity
There have been quite a lot of changes at BlackRock’s UK team over the past number of years, particularly since UK equity team managing director and portfolio manager Mark Lyttleton left in March 2013.
At that time, advisers said Lyttleton’s departure was unsurprising given his poor performance on the UK Dynamic and UK Absolute Alpha funds.
McDermott adds: “Post Mark’s departure, certainly Richard, although he was head of small- and mid-cap equities, was the highest profile UK manager BlackRock had and he was highly regarded not just by us but the majority of people in the industry.
“So you can’t say Richard’s exit is not a bit of a blow for BlackRock but I certainly don’t think it is a total disaster and not recoverable.”
Hargreaves Landsdown Laith Khalaf agress that BlackRock can recover from the departure: “BlackRock is an absolute giant as a company … though Plackett’s exit is bad news for BlackRock, they are not so dependant on one individual leaving.”
McDermott adds: “I think the UK team is re-finding its identity. They had more of a difficult time in the past on performance and the new team has found its own identity and proved its way going forward.”
After the team reshuffling and the disappointing performance of the UK Special Situations fund, experts also say investors have nothing to fear, for the moment.
“Fund managers’ transitions are quite well managed these days,” adds Informed Choice managing director Martin Bamford. “Of course it is important to keep an eye on performance in the next six months to a year and see if the departure had any impacts.”
Axa Wealth head of investing Adrian Lowcock agrees that investors need to wait and see, and not panic. “You need to look at the fund and see the impacts as [Plackett] has a long track record with significant decision making in the process … BlackRock is large enough in that team so they can absorb his departure.”