Fund Manager Changes January 2022

An update confirming changes to the St. James's Place fund managers

Irongate have been a strong supporter of Hamish Douglass of Magellan Asset Management who operates out of Sydney, Australia and who runs the International Equity Fund as well part of the Global Growth Fund. He took over from Taube Hodson Stonex Partners after Nils Taube died and John Hodson retired. Since my firm joined the St. James’s Place Partnership on the 1st July 1999 the longer running International Equity fund has grown after charges by + 536%, whilst the S&P 500 grew by + 429 % and the MSCI ACWI by +329 %, so a great return.

Sadly things are not all good at the Magellan house. The St. James’ Place Investment Committee have long argued that Hamish was spreading himself too thinly and wanted him to concentrate on the fund management and not on the day to day running of his very successful business.  However, the CEO has abruptly left and Magellan’s silence on this has disturbed investors. Hamish is also having personal issues and he and his wife are splitting up. There may be other issues that the Investment Committee has not revealed but their concerns are such that for the protection of our clients they have withdrawn the mandate and given it to the firm State Street. This is precisely what an Investment Committee should be doing in safeguarding client’s money.

So, who are State Street and how do they fit within the Irongate Investment Beliefs? As one of the biggest passive investment managers in the world at first we were concerned as we are advocates of pure stock picking, but on subsequent discussions with the St. James’s Place Investment Committee this actually looks like good news. State Street will be managing an “Active Quantitative” mandate.  This will not be a passive investment in the true sense as it will not slavishly track an index, nor is it an Exchange Traded Fund (ETF), or worse a synthetic derivative based one. Instead they will physically buy the underlying stock.

The strategy or request is set by St. James’s Place which in this case is to provide a diversified portfolio of 75 shares which will be spread across Value, Quality, Growth and Momentum stock taken globally from the MSCI ACWI index against which they in effect use as a benchmark. Whilst a true "bottom up" stock picking style is not used, there is discretion in what type of companies they are looking to invest into using a number of metrics such as taking into account ESG considerations. These metrics alongside if you like, a wish list, together with a top down approach to geography, used here to provide balance and diversification go towards creating an algorithm to determine which companies should be included. This is something active managers do themselves, more so with boots on the ground rather than through computers, but this latter route has the advantage of speed and reduced costs.

Such strategies do take away some of the “magic” that can be found in the most successful managers as well as the emotion, but we believe that this strategy has a place within the Irongate Portfolios. State Street will make up 13.5% of the Irongate Equity Portfolio and 7.8% of the Total Return Portfolio.

The value of an investment can go down as well as up.

You may get back less than you invested.

Past performance is not a reliable guide to future performance.

The opinions expressed are those of Irongate, this material is not a recommendation, or intended to be relied upon as a forecast.