ASI's £900m mandate wins boost UK equity capabilities
Highly rated team
The team-based approach and ‘safe pair of hands’ reputation of the Aberdeen Standard Investments' UK equity team has helped it secure a number of high-profile new mandate wins in the past year.
ASI took over management of Neil Woodford's Income Focus fund on 31 December, while the ex-Mark Barnett-run Perpetual Income & Growth trust will soon be merged into Murray Income Trust.
The now LF ASI Income Focus fund added £249m of assets onto the firm's UK equities desk, while PLI will add between £650m and £500m, depending on how many shareholders take up the cash exit offer once the merger is given the green light.
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Murray Income is lead-managed by Charles Luke, with Luke, Thomas Moore and Iain Pyle all named as co-managers on the Income Focus fund.
The moves have been broadly welcomed, with fund buyers such as Hawksmoor's senior fund manager Daniel Lockyer noting the team was widely seen as "a safe pair of hands", with its "team approach seen as a positive attribute as the popularity of a fund managed by a single star manager wanes" post the blow-up of Woodford Investment Management.
Morningstar analyst Fatima Khizou added that the ASI team has been "relatively stable" since the 2017 merger of Standard Life Investments and Aberdeen Asset Management. It is now "among the most resourced in the UK equity space", Khizou reasoned.
"The team's members have sector research responsibilities and the research is used for all the strategies they run," she continued.
"In some instances, the manager might complement the team's research with his own analysis. The research framework is solid and the group continues to make improvements to the research notes across all teams."
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Different investment styles
One benefit of the blockbuster merger between SLI and AAM, Khizou continued, was that it brought together two different styles of investing. As Lockyer noted, the reasoning for Link and PLI choosing ASI's team were contrasting.
For the ex-Woodford fund, Link chose a team with a similar mandate to its predecessor - in blending value with finding quality growth - while for PLI it was more about switching from an out-of-favour value bias to a quality-growth style.
Bringing "a broader set of ideas and different perspectives" was a key benefit of a team-based approach, according to Teodor Dilov, fund analyst at interactive investor. This should, in theory, lead to high-quality portfolios constructed of strong and well-researched holdings, he reasoned.
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Fergus McCarthy, ASI's UK distribution director, said at the UK equity team's core was its equity research platform, which incorporates ESG considerations, focuses heavily on meeting company management and carrying out rigorous due diligence, providing broad and deep company analysis.
"This fundamental research along with our experienced fund managers allows us to deliver a variety of client outcomes," McCarthy said.
"Combined with our infrastructure, in terms risk management, oversight, governance and distribution, it means we are well placed to market our existing funds and tender for new mandates."
Charlie Parker, managing director at Albemarle Street Partners, said the firm had long focused on having a team-based approach, "and resolutely resisted the pull of creating star managers".
"The proof is in the pudding," Parker added. "While senior figures have left the team - such as David Cumming's departure to Aviva - performance has been sustained."
Limiting "key-man risk" was another advantage of a team-based approach, Dilov reasoned. "Something which again, theoretically should keep the strategy intact regardless of team changes," he said.
"On the other hand, those who favour star managers could argue that decision making is key - one person takes all responsibility for performance."
Khizou countered, though, that while the team-based approach was "positive", the portfolio managers do "continue to have ultimate responsibility for their respective funds".
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