Its Not Harry

Comment and opinion for retail investors in the UK

Funds

YAP – IMPORTANT – TM Crux funds divide after takeover

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Following a sale of the Crux business to facilitate the retirement of veteran fund manager Richard Pease (a European market specialist), the new owners Lansdowne Partners have decided to focus on European markets and 3 UK specialist funds, including the one run by the Richard Penney (UK Special Situations) have moved under a new roof at Oberon Investments.

I have to confess to having no prior knowledge of Oberon. An internet check tells me that they are a UK listed boutique investment house. Their shares are owned in quite large percentages by other specialist UK investment businesses and the founders. I was surprised to note that a longish photo gallery of fund managers and analysts includes not a single woman.

Interactive Investor lists no Oberon funds as far as I can see. I assume they will have to communicate with investors in the TM Crux UK funds on their platform to explain what they are going to do.

I own the former TM Crux UK Special Situations fund and am putting it on immediate close watch. Recent past performance has been very poor, but Richard Penney is a genuine deep value investor who can make money very fast on a market rotation, or at least he has done in the past. He and his team may end up subsumed into Oberon’s operation (they seem to have a special situation manager already), or sit as a side show – that cannot yet be known,

YAP – UK Sustainability Rules for funds – a stuttering arrival

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A reminder of the history

Those readers interested in ESG investing will know that the EU has for some years now had rules for classifying funds in terms of their likely qualification as having sustainable investment objectives.

Following their introduction there was rush of funds that perhaps thought having the ‘right’ label would increase sales, but following some push back against greenwashing the number in the Article 8 and Article 9 funds has reduced and new rules (from ESMA, so EU applicable, but given that many funds in the UK are also marketed in Europe, they will impact UK funds) are about to be implemented and they are likely to thin that number down significantly, according to Morningstar.

All this is timely progress in having credible signposting and sustainability auditing for investors, not easily shuffled around by marketing departments intent on green washing and bypassed by fund managers wanting to sneak in non-qualifying assets that they think will boost performance rankings.

You will also recall that the UK, inevitably in the post-Brexit period, decided to have its own rules and undertook the sort of slow process devising the rules that viewers of ‘Yes, Minister’ will have heard expounded by Sir Humphrey many times when asked by Jim Hacker to implement a new policy. Having said that, I personally thought that the UK proposals were better thought out and less likely to be skipped over by the afore-mentioned rogues.

There are always new regulations to learn in the world of finance

The UK rules, which extend well beyond creating labels for ESG approved funds are generally now known as SDR (Sustainability Disclosure Requirements). There is now evidence that complying with these rules is not such a pushover.

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YAP – Proof of the pudding?

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Recent volatility in global stock markets has, as ever, attracted media attention, because it mainly involves sell-offs. I thought it would be useful to see how different types of assets, such as we may actually own, have performed since the first hint of nervousness at the start of August.

To do that I am going to use short term data, obviously. I need to remind readers that short term data is NEVER a useful indication of relative OR absolute future performance. It can also be down right misleading. The data I am using is over one month ending about now, so it starts AFTER the August sell off. Relative to that starting point performance it will look much better that if I had, for example, been able to use 6 week data.

My objective is only to observe the direction of returns from various funds during this period of nervousness, leading to exaggerated volatilty. So one month data is ideal, specifically for this objective.

Does diversification actually work is the sort of sell-off we have seen lately?

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YAP – Axa Framlington sold

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Some of my subscribers own the Axa Framlington Global Technology fund and indeed I myself have owned it in the past. Until fairly recently, it would have made most short lists for investors researching a tech specific theme. However, it was announced a little while ago that the long-standing manager, Jeremy Gleeson was leaving. His new post has since been announced – he has moved to Allianz GI to start up a new Technology fund – that will be worth putting on a watch list, I reckon.

Now we learn that the entire Axa Framlington business has been sold to BNP Paribas. That is no surprise.

After spending a fortune accumulating UK investment and insurance businesses (for example, Sun Life, Equity & Law and Framlington), AXA (a mega sized French insurance firm) did an about face (volte-face, I perhaps ought to say in this case!), and began selling off the assets, sometimes to the dismay of their clients, when the purchasers were consolidator administration firms that care more about squeezing margins than good client service.

I am off on my hols!

BNP Paribas have made their own forays into the UK investment market, mainly at the fringes and without gaining traction. This transaction has the feel of an old mate helping out, rather than an enthusiastic purchase with fresh investment and ideas to come. Mr Gleeson’s departure now looks like that of someone who saw the writing on the wall.

Any investment in Axa Framlington funds ought now to be scrutinised over the coming months and some research into alternatives undertaken, in my opinion.

For your information I am away on holiday from August 7th to 14th, so this is likely my last blog post for a fortnight or so.

Deep Dive – July 2024

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Scores on the doors

As advertised, I thought it would be useful to take a look at the first half of 2024 and, after the UK election results which are the most significant ‘macro’ event for UK investors at this time, put out some ideas about asset allocation, where to re-invest those hefty tech fund gains and in general assist readers who are undertaking regular portfolio reviews, or maybe are even still building up their asset base from cash.

The elections in France have also been the subject of much media interest, but I am not sure the result will have much impact on European markets, and as I write this article, it is not really clear how a new French government will be formed. The significance is perhaps more about confidence in the Euro, but I never forget an old, only half jesting, comment that the Euro is only the New Deutschmark!

Some data to kick off

This table covers as many asset class categorisations as I think are relevant to my subscribers and in offering benchmark return data, I have not resticted example returns to a published market index or tracker ETFs, but in many cases shown an actual fund that I know is owned by many readers and would be considered a good market example, widely owned by many retail investors.

If you are interested in only what the main global indices would have returned, your data is in fact encapsulated in a ready made mix in the Vanguard Lifestrategy fund information supplied.

I have also this time added the results from the AFI model portfolios, which are maintained by a panel of the larger IFA/wealth manager groups in conjunction with Financial Express (the company behind Trustnet), the FTSE benchmarks that discretionary fund managers ought to be supplying to clients and also my own GIA account results. I have even left space for you put in yours, which you can get from a portfolio X-Ray!

[Read more…] about Deep Dive – July 2024

YAP – Axa Framlington Technology Fund

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I know some of my subscribers are quite rightly fans of Technology funds, as I am. The ever rising price of Nvidia shares continues to boost valuations in the sector, all by itself, it seems at the moment!

One of the funds that it seems did not at first pick up on the most recent surge in the valuation of the handful of leading shares likely to benefit from AI (the Mag7/Fab5) was Axa Framlington’s Technology fund which until fairly recently had delivered superb results in the hands of Jeremy Gleeson.

As a result some of us had lately preferred alternatives like funds from Guinness, Polar Capital and Blue Whale., amongst others.

I now can report that Mr Gleeson is leaving Axa Framlington ‘to pursue another opportunity’. His successor has not yet been named.

This news will be of interest to any readers who still own the Axa Framlinton fund.