Ninety One AoV: Nearly a third of funds do not offer value to investors
Two UK funds among those questioned
Twelve of the 40 funds evaluated by Ninety One have been found not to offer value to investors, with performance at the heart of the issue, according to the firm’s first Assessment of Value report.
Four of the funds not currently offering value to investors are categorised as having "actions in progress", which the firm defined as "steps to remedy areas of concern are identified and in the process of being implemented", while the remaining eight had "actions implemented", meaning "steps were taken to remedy areas of concern and the impact of these steps are being monitored".
The UK Special Situations fund and UK Total Return fund, both managed by Alessandro Dicorrado and Steve Woolley since April this year after Alastair Mundy took an extended leave of absence for health reasons, were found to have "not outperformed [their] benchmark[s] as consistently as the board deemed acceptable", but both had achieved their objectives and outperformed cash, and there was "no concerns" regarding charges.
The performance of the former was "in line with its value-style approach", but the board have stated they will "continue to monitor the fund's performance closely" and take "remedial action if needed", while the latter requires "additional investigation into remedies to improve performance" , which is "underway".
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The Cautious Managed fund, managed by Jason Borbora-Sheen and John Stopford since May this year, and the Global Dynamic fund, managed by Ian Vose and Rhynhardt Roodt, also failed to outperform their target benchmarks as "consistently as the board deemed acceptable", but did meet their objectives and outperformed cash.
All of the remaining eight funds, for which actions have been implemented, were cited as either failing to outperform the benchmark consistently enough or underperforming the benchmark in certain period.
Across the entire firm's offerings, the board concluded that the "investment manager has delivered on the performance expectations for the majority of its funds", and for those that did not, "further actions have already been implemented, or are in progress, with an aim to rectify the issues that have been identified".
Other factors analysed as part of the Assessment of Value report included AFM costs, which the board found to be "fair and reasonable" and economies of scale, which the board concluded "any savings achieved have been passed through to investors, with the investment manager not retaining any benefit of lower outsourced rates".
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Also explored were comparable market rates, which were found to be "fair, reasonable and currently relevant in relation to the services provided", comparable services, with which the board was "satisfied with [the] approach and considers that the appropriate governance structures, oversight and controls are in place to allow fair and consistent charges for investors in the same strategy", and classes of units, for which the board concluded that "the current pricing policies and review process should be maintained to ensure the range of share classes suits the investment manager's diverse investor base".
Additionally, it was "satisfied that eligible investors have been converted to a cheaper share class where an appropriate alternative option existed".
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