Fund managers Gervais Williams and Martin Turner have led inflows at Miton over H1, despite Brexit uncertainty prompting redemptions from their UK equity peers.
The £1.3bn Miton UK Multi Cap Income strategy fund accounted for 35% of net flows over the six-month period ended June 2018, according to analysis by Liberum. The US Opportunities, US Smaller Companies and European Opportunities contributed approximately 44% to net flows.
During the reporting period, Brewin Dolphin also appointed Williams and Turner to run part of its UK equities allocation in its managed portfolio service (MPS).
Miton’s assets under management grew to £4.5bn from £3.4bn on net inflows of £660m over the period.
Funds benefit from product differentiation
Chief executive David Barron (pictured) told Portfolio Adviser: “The Multi-Cap Income has invested in a broader opportunity set, so it invests across the market-cap spectrum, in a period when the UK was quite out of favour. That differentiation from other equity income strategies has been key.”
Investors have pulled £9.6bn from UK equity funds since the referendum in June 2016, according to the latest Investment Association figures.
The £554.2m US Opportunities fund has also appealed to investors due to its differentiation from rivals, Barron said. “It’s delivered good performance without necessarily holding the very large cap technology stocks, which gives it differentiation from much of the peer group.”
Interest in the £394.2m European Opportunities was gaining momentum as it approaches its three-year track record, he said. It launched in December 2015.
First sub-advised mandate for wealth manager
From a fund house perspective, Barron said the sub-advised relationship with Brewin Dolphin made sense. It is the first sub-advised mandate the fund house has run for a wealth manager.
“When you take on any business, you’re looking at the revenues, the relationship with the client, the persistency of the business, the servicing requirements. Overall that sub-advised business stacks up to me.”
“It has the advantage these are quite sizeable mandates and that can be appealing.”
Inflows from the sub-advised mandate were not published in the results. “We’ve seen flows in line with what we’d expect,” he said.
Every bit of the value chain is under scrutiny, he said about the growth of wealth managers adopting sub-advised strategies for MPS.
“DFMs are going to review how they deliver their investment proposition to their clients. They will decide for reasons of efficiency and possibly cost that it’s better for their clients to do it that route.”
Shift to quarterly AUM updates
The results reiterated Miton would begin quarterly AUM updates from October in line with industry norms.
Barron denied regular reporting encouraged short-termism among shareholders.
“It just enables investors and analysts to get a better handle on the AUM at any time. That appears to be the norm for listed companies and to a degree many followers of Miton could go to the fund factsheets and get a good picture.”
Barron expects the funds to remain in favour for the rest of the year, although he believes value could make more gains in H2. “For many years now, growth has been in the ascendancy, when we move into a period when interest rates are more likely to go up than down, that may be a good time for value strategies.”
