Artemis has raised £81.6m for Stephen Snowden’s Corporate Bond Fund as the funds he used to run at Kames Capital bleed money.
Snowden (pictured) will be supported by his fellow former Kames colleagues Juan Valenzuela, David Ennett and Stephen Baines on the Artemis Corporate Bond Fund.
The quartet of managers had managed more than £4.3bn worth of sterling bonds and $1.2bn worth of global funds together at Kames Capital before Artemis announced late last year that it was swiping the team to bulk out its fixed income offering.
All four sterling bond funds have shrunk in size and now collectively represent £2.1bn. The global funds now hold $503.8m, according to FE Analytics.
Artemis raided Kames again in May with the appointment of Jack Holmes as the fifth member of its fixed income team.
Kames bond funds shrink in size
The sizeable £81.6m raised for launch will be crucial for getting intermediaries to take a look at the fund, said AJ Bell head of active portfolios Ryan Hughes. “It’s so hard to get that first hundred million and they’re very nearly there so that puts it on people’s radars immediately.”
The Artemis Short-Dated Global High Yield Bond fund launched for Ennett and Baines in June with £85m and has since surpassed the crucial £100m threshold many intermediaries seek with £107m, according to its latest fact sheet.
Ongoing charges on the Artemis Corporate Bond Fund will be 0.40% significantly undercutting the 0.78% fee on the Investment Grade Bond fund Snowden used to run at Kames. When he left that fund had £1.5bn but has now shrunk to £688m. It is co-managed by Euan McNeil and Rory Sandilands.
It would be interesting to see if the Artemis fund grows quickly on the back of redirected outflows from the Kames product, said Hughes. “People very much associated him with the product. He’s very clear on what he sees in the market and what he wants to do so he has a personal following.”
The £1.8bn Absolute Return Bond fund Snowden used to manage now has £661m and is co-managed by Sandilands alongside Colin Finlayson.
Artemis clearer about its benchmark
The Oeic aims for a greater total return after fees than the iBoxx £ Collateralized & Corporates Index over a rolling three-year period.
Tilney managing director Jason Hollands noted that is a “more rigourous market benchmark” than the Kames Investment Grade Bond fund, which is benchmarked to the sector and has a “somewhat vague objective” of providing a combination of income and capital growth over any seven-year period.
“In practice, I think this fund will be managed in a similar fashion but will also benefit from a more competitive fee,” Hollands said.
Investment-grade corporate bonds will account for at least 80% of Snowden’s new fund and at least 80% will be denominated in or hedged back to sterling.
Corporate bonds not enticing
The strong launch for Artemis comes despite the fact the £ Corporate Bond sector is currently a tough sell, said Hughes.
“Spreads are very tight over over gilts right now so I wouldn’t say there’s a huge amount of value there,” he said. “But maybe that points to the fact that you need an active manager and someone that is prepared to be active and back their convictions. That’s certainly the type of fund manager that Stephen Snowden is.”
Active fixed income funds have been much more sensitive to pricing pressure from passives than in the equity space, he said.
AJ Bell has told Kames that their products are too expensive. “I wouldn’t be surprised if we see some movement from Kames on that because they’re looking like a real outlier.”