Artemis multi-asset fund fails to turn fortunes around after star manager quietly exits

William Littlewood’s departure in December 2020 has gone under the radar

Photo by DDP on Unsplash

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The Artemis Strategic Assets fund has been unable to shake its poor performance run, despite a change in management, which saw industry veteran William Littlewood step aside.

The multi-asset fund was spotlighted for its performance woes for a third year running in Artemis’ latest assessment of value (AoV) report, which is required by the Financial Conduct Authority (FCA).

Of the boutique manager’s 19 funds with eligible track records, 10 lagged their respective benchmarks and/or failed to beat the average Investment Association sector comparator over five years.

A handful of funds, including Artemis Strategic Bond, underperformed by only a small margin.

This was not the case for Artemis Strategic Assets, however, which lagged its UK Consumer Price Index (CPI) +3% benchmark by 36.9%. The £213m fund has lost investors 6.5% in the five years to 31 December 2021 and did not perform better than investing in cash.

It was the only fund in Artemis’ line-up deemed not to offer value overall, after weighing performance against costs and charges and quality of service.

Star manager exits under the radar

Artemis Strategic Assets’ persistent underperformance comes despite a “change in management at the start of 2021” which saw co-manager Kartik Kumar assume sole control, the report noted.

Littlewood, the previous lead on the fund, retired from Artemis in December 2020. The boutique manager did not issue a press statement announcing his departure, but shareholders were notified.

Littlewood rose to fame at the helm of the Jupiter Income fund. Between November 1990 and December 1999, he generated returns of over 600% for investors, over double the average equity income fund, which cemented his status as one of the UK’s star stockpickers.

He left Jupiter in 2000 at the age of 34 partly due to ill-health only to resurface at Artemis in 2005 to work on a small hedge fund. He returned to mainstream asset management by launching Artemis Strategic Assets in 2009.

However, he was not able to capture the stellar highs of his Jupiter days, with his fund consistently lagging the IA Flexible Investment average from 2015 onward.

Around that time assets also began to dwindle, falling from £830m at the start of January 2017 to £298m the month Littlewood left, according to estimates from Morningstar.

Risk management has ‘evolved’

Artemis’ fund board said while there had not been “an immediate short-term improvement in the fund’s performance”, the approach to portfolio construction and risk management had “evolved” since Kumar took the reins.

“It is now expected that long equities, which are selected by a rigorous research-driven, ‘bottom-up’ approach, will be the primary driver of returns,” it said in the AoV report.

“Short equity positions are used selectively as a hedging tool to reduce market correlations. Bond exposures will act as a diversifying element in the fund.”

It added Kumar had maintained a “material short position in developed market government bonds”, the main culprit behind the fund’s underperformance over the period, on the basis some regions are underpricing the risk of higher inflation.

“While the manager has realigned the short bond positions to better hedge against the fund’s equity positions, this remains a significant driver of risk within the fund.”

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