St James’s Place’s inaugural Assessment of Value (AoV) report has revealed only 44% of the funds offered by the firm offer investors “good value”, with 12% on its “watchlist”.
The firm divided its 39 funds into three broad categories, with a green rating awarded to those delivering "good value", an amber rating for those "broadly delivering value" but have "specific areas" which require "closer ongoing monitoring", and a red rating for those on its "watchlist" for the worst performers.
Fixed income, equity and multi asset funds all feature on the "watchlist", along with both income and growth funds, while James de Uphaugh is the only manager to feature twice on those red rated funds.
Despite this, 83% of clients are "satisfied with their relationship with St James's Place", along with a further 84% agreeing the firm provides "excellent client service" (which is defined as above eight in a ten point scale) and 87% would recommend SJP to others.
The UK & General Progressive fund, managed by de Uphaugh, Chris Field, and Imran Sattar of Majedie and BlackRock's Luke Chappell, is on the list as it "has not achieved its stated objective of capital growth over the past five years", although this is caveated by "the market declines of early 2020". It has underperformed its benchmark but outperformed its IA sector over the assessment period.
Of the Blackrock- and Majedie-managed fund, SJP laid the blame at the latter's door, suggesting its investment style "results in a bias towards companies in particular business and industry sectors which have underperformed in general, as well as poor performance from individual companies selected by the fund manager", adding the fund is "under a heightened level of monitoring to determine whether changes to the investment strategy or fund manager would improve performance".
UK Growth, managed by de Uphaugh, Chris Field and Matthew Smith, also features as it "has not achieved its stated objective of capital growth over the past five years", with the same caveat, but has underperformed both its benchmark and sector over the period.
Of the Majedie fund, SJP reiterated their earlier commentary, pointing to its "particular investment style" driving underperformance.
Managed by Nick Purves, the Equity Income fund is on the "watchlist" as it has "not achieved its stated objective of capital growth or the required level of income over the past 5 years", once again receiving the early 2020 caveat, although it features an extra clarification that, prior to 2020, it was "meeting its capital growth objective". It has also underperformed both benchmark and IA sector.
SJP acknowledged the RWC fund is under a "heightened level of monitoring" but added that it "retain[s] confidence in the fund manager's approach and are unlikely to take any immediate action".
In fixed income, the Investment Grade Corporate Bond fund, managed by David Rolley, Lynda Schweitzer and Scott Service, has failed in its capital growth objective over five year but has met its income target, although it has underperformed both benchmark and IA sector. SJP are also concerned about the risk level of the fund and is "closely monitoring" it to ensure the risk is "appropriate", and "engaging" with manager Loomis Sayles to improve ESG integration.
Underperformance was "largely" attributed to the "hedging strategy" currently in place on the fund and despite the "heightened level of monitoring", SJP again "retain[s] confidence in the fund manager's investment approach".
Additionally, in June 2020 the firm changed the fund's investment strategy, including "the removal of the interest rate hedging restrictions, to allow closer alignment with the broader market, which we anticipate will improve performance".
The Multi Asset fund, managed by David Millar, Mike Hodgson and Scott Weiner, also features on the "watchlist" due to failing in its "stated objective of capital growth over the past five years", with the 2020 caveat, and while "performing in line with its IA sector", it has "underperformed relative to the broader market".
Of the Invesco, Payden & Rygel and Schroders fund, SJP pointed to the former's "cautious positioning" to explain underperformance, before adding this investment style "helped to reduce the impact of market declines in early 2020". Although currently under a "heightened level of monitoring", SJP "remain[s] comfortable that the fund is an appropriate and strategic component for our diversified investment portfolios".