ASI bond fund becomes casualty of yanked £109bn Scottish Widows mandate

Steven Logan’s high yield fund forced to close after massive redemption

Failed Scottish Widows merger behind Lloyds' £109bn exit

Aberdeen Standard Investments’ Global High Yield Bond fund has become a casualty of its terminated contract with Scottish Widows which has yanked a significant chunk of the fund’s assets forcing it to close.

ASI confirmed the fund would close on 26 October after its largest investor decided to pull their investment, which “constitutes a substantial portion of assets. 

Portfolio Adviser understands the divestment relates to the £109bn Scottish Widows contract that was yanked by Lloyds from Aberdeen Asset Management shortly after its merger with Standard Life Investments.  

Lloyds divvied up the contract, which at the time made up 17% of Standard Life Aberdeen’s total £646bn of assets under management (AUM), between Schroders, which was awarded £75bn, and Blackrock. However, following a legal challenge from ASI parent-company, Standard Life Aberdeen, Lloyds agreed to allow the fund group to continue managing a third of the assets under management until April 2022. 

The Scottish Widows investment in the Global High Yield Bond represents around 95% of the fund’s assets which would leave the £526.2m fund with a paltry £26.3m remaining. 

No other funds have been affected by the migration of the remaining Scottish Widow assets as of yet. 

The Global High Yield Bond fund has been managed by Steven Logan since 2016. Over the longer term it has come up short against peers in the IA Sterling High Yield sector, returning 6.2% and 17.3% over three and five years respectively versus the average peer’s returns of 6.8% and 21.6%. On a one-year view the fund is in the top quartile having generated 0.9% against the sector’s 0.6%. 

This is the second fund ASI has decided to shut in the past week. Last Tuesday Portfolio Adviser revealed the fund group would be winding-up its severely underperforming UK Recovery Equity fund which beat out the Woodford Equity Income fund as the worst performer over the first half of the year after it fell 42.5%  

The decision to liquidatthe £52.6m fund, formerly run by Andrew Hunt, was also triggered by the largest investor requesting their money back though Portfolio Adviser understands this was not related to the Scottish Widows contract. 

See also: ASI to shutter significantly underperforming UK Recovery fund

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