Ignoring her recent well-publicised mucky spat with ex-New Star boss John Duffield, Zemek has maintained a sturdy reputation in the fund world, helped by relatively smooth ride at AXA IM, culminating in an award for Outstanding Contributor to the Industry by OBSR last year.
Her £132m Axa Sterling Corporate Bond Fund has returned 10.4% on a total return basis since she took over in October 2008, according to FE Analytics. However, this is well below the average fund in its sector, which has grown 24.6% in the same period. The fund is ranked 63rd out of 106 funds over one year and 75th out of 95 funds over three years.
trueIn the fund’s most recent fact sheet, Zemek blamed its recent poor performance on exposure to French banks, though she added selectively to the banking sector, including Credit Agricole. She also maintained her view that banks are better positioned than before the 2008 crisis.
This, of course, only tells a small part of the story and it is a shame that the fund’s growth has stalled since the summer, even with the help of ex-New Star colleague James Gledhill who joined the team in June as deputy head of credit. Given the many bearish predictions for corporate bonds in 2012, perhaps now represents the right time to make the management move.
Strategic flexibility
Investors wishing to allocate to fixed income today may prefer the flexibility afforded by strategic bond funds, an area in where Hayes, another ex-New Star manager, has spent most of his career working.
Since he took on the AXA Sterling Strategic Bond Fund in June 2010, he has returned an impressive 16%, versus a sector average in that time of 7%. The fund is ranked 4th out of a universe of 66. Axa IM must obviously think highly of him with a global strategic bond fund in the pipeline for next year as well.
“I wouldn’t say that people have been clamouring for Zemek to move over, nor that Hayes is a rising star that Axa want to put in, but it makes sense as he has been running the Strategic Bond Fund for a year, and Zemek wants to take a step back and move into a managerial role, that he is a natural option to take over,” commented Ben Seager-Scott, senior research analyst at Bestinvest.
“The things we are looking for now is if there be a change in the management style or mandate, because obviously there is a difference between running strategic and corporate bond funds. It will be interesting to hear how Hayes intends to run it, whether he will stick with Zemek’s style or put his own skills on it. With Zemek taking a step back, I’d also like to know what other resources the team will put behind the funds.”
