St James’s Place has soft-closed two of its funds in order to protect the interests of its existing investors.
GEM closure
The firm’s £800m Global Emerging Markets fund, managed by First State’s Jonathan Asante, and the £1.6bn UK & General Progressive mandate managed by John Wood of JO Hambro Capital Management (JOHCM).
The Global Emerging Markets fund will close to new investment from 28 April. Clients will also not be able to switch from other funds into the vehicle.
JOHCM has always adopted a similar approach to its own funds, agreeing at launch with fund managers the level of assets beyond which it would be difficult to maintain performance. This has led to a number of its successful funds being soft closed to investors when they reach that capacity.
Chris Ralph, chief investment officer of SJP, said he believes capping funds at an appropriate level of assets is one of the firm’s fiduciary responsibilities. “We believe different fund managers have different levels of investment capacity. This is something we analyse and think about in the due diligence process [when setting up new funds].”
Although a maximum figure for assets is set at the outset for each fund, Ralph said this can change. “Things move and markets change so one needs to be flexible in these things, for example if we moved from a market that was liquid to a more illiquid market that would have an impact on capacity.”
Performance protection
SJP has soft-closed mandates in the past, said Ralph, and will continue to adopt this approach in order to treat all customers fairly.
“This is part of the normal relationship we have with fund managers. We have good flows of investors and new clients and we want to make sure the opportunity for clients to realise strong investment performance is not curtailed [by assets growing too large]. We think this is an important part of our fund manager assessment – to understand where it is likely the fund manager’s ability to generate excess returns may diminish because of the assets they’re running.”
Funds could open to investment again in the future if it was felt the fund manager could accommodate more capacity without compromising performance, Ralph added.
