Artemis capable of launching trio of funds as it poaches from Kames

Partnership structure among the perks that likely lured Snowden and co



Artemis is likely eyeing investment grade, high yield and possibly absolute return fund launches as it confirms it has lured four fixed income managers from Kames Capital, including former co-head of fixed income Stephen Snowden.

Kames confirmed Snowden’s exit last week, alongside and head of high yield David Ennett to Artemis plus fixed income fund managers Stephen Baines and Juan Valenzuela.

The managers will join Artemis early in 2019.

Trio of possibilities for fund launches

Darius McDermott, managing director at Chelsea Financial Services, said he rates existing Artemis fixed income managers James Foster and Alexandra Ralph, who have co-managed the Strategic Bond fund since launch, highly.

Ryan Hughes, head of active portfolios at AJ Bell, said the hires complement the existing capability. “The hire of Snowden enables them to launch an investment grade fund while David Ennett brings high yield capability which will sit well alongside the Artemis Strategic Bond and High Income funds.”

He added that there also the scope for Snowden to launch an absolute return fund similar to the one he ran at Kames “which proved to be very popular” and would result in Artemis having the “full range of fixed interest funds”.

A spokesperson for Artemis said he could not yet comment on the appointment of the four hires because of their contract with Kames. He would not discuss exactly when the four managers would join.

Remuneration not the only factor behind defection

Remuneration would have been one of the key issues the managers considered when making this move, McDermott said. Artemis states on its website that fund managers and senior executives are part of its partnership, which it argues is a flexible and robust structure for an investment management business.

Hughes agreed remuneration would have no doubt remuneration been a factor, but added there was likely to have been an element of freedom and flexibility that will have come into the managers thinking.

Hughes added: “I’m sure given the approach at Artemis, he will be able to refocus on fund management rather than getting caught up in internal corporate issues and this can only be seen as a positive, particularly if the environment for fixed interest becomes more challenging going forwards.”

Responding to the remuneration comments, a Kames spokesperson pointed to a statement made when it announced the fund managers’ departures. “It is a very competitive market and we are not immune from it. Whilst we have traditionally had good fund manager tenure people do sometimes leave, but this give us the opportunity to promote talent from within and look to recruit where appropriate to refresh our fixed income offering.”

Managing outflows in uncertain credit environment

The loss of senior investors such as Snowden and Ennett is a “significant blow” for Kames, said Hughes. “I would fully expect assets to move out of the Kames funds which is likely to create significant pressures for the new managers, particularly if the credit environment gets tougher in the coming months,” he added.

McDermott said Kames is likely to add to its existing team of fixed income managers.

Kames said the departures will have no impact on the funds’ investment process, strategy or direction as it employs a team based approach to all of its funds.

The spokesperson said: “The likes of Euan McNeil has a wealth of experience and has been the co-manager on the Investment Grade Fund since inception whereas Stephen Snowden only re-joined Kames in 2012. While Colin Finlayson has likewise been the co-manager of the Absolute Return Bond Fund since its launch.”