With AUM soaring to a respectable £700m after the launch of the boutique asset manager in 2013, it was expected the former Cazenove dream team of Tim Russell and Chris Rice, later joined by Julie Dean, were a sure bet for strong returns.
In reality, its European and UK focused funds have struggled, with Ben Yearsley, director at Shore Financial Planning, slamming its two absolute-return select funds saying investors would have been better off holding cash.
They are the “real disappointments”, Yearsley says, with Sanditon’s UK Select Fund returning -1.8% since its launch in December 2014, despite aiming for 2% plus inflation, and the European Select Fund posting a -11.2% return.
“They lost you money,” Yearsley says. “I know EU inflation has been lacklustre but performance has just been poor, it’s a simple as that, and the UK Select Fund has been no better.”
A further two funds have underperformed the index.
Since launch, Dean’s UK fund has returned just 2.3% against the All-Share’s 11.5% and Rice’s European fund, even with 35% returns, has managed to underperform the World Europe ex UK index by nearly 10%.
It is down to the team’s business cycle approach to investing, where the current belief that markets will soon experience an imminent downturn, and subsequent cautious portfolio positioning, has been proven wrong.
Sanditon’s CEO Rupert Tyer accepted that performance has been “below what one would expect”, but defended the cycle approach.
“In the short term I would acknowledge that we have been wrong, but it’s very easy to look in the rear view mirror and not look at where you are going,” Tyer says.
“We are not changing our stance across the board and we do think there is a high degree of correlation in the industry, lots of managers doing the same thing.”
He adds: “At some point investors will come back to reality and the type of companies we own, which would be in the value camp, will begin to perform.”
Among those admitting Sanditon’s offering has been a “slight disappointment”, is Hargreaves Lansdown’s research director Mark Dampier, who fears its strategy could have its limits.
“The problem with the business cycle is that since the financial crisis the business cycle has been more difficult to follow. I liked the way they managed money in the past but since the financial crisis the cycle has flattened a bit,” Dampier says.
The cautious team has depended on its market predictions coming true, and chief executive Tyer is insistent that this will soon happen.
