Kames Capital has suffered a “serious blow” to its fixed income franchise as four named managers across more than £5bn worth of funds exit the Scottish asset manager, compounding the losses suffered when David Roberts and Philip Milburn jumped ship to Liontrust last year.
Stephen Snowden (pictured), who co-manages the £1.5bn Investment Grade Bond and £1.8bn Absolute Return Bond funds, is among the exodus, alongside high yield managers David Ennett and Stephen Baines, plus Juan Valenzuela, who co-manages sterling and global strategic bond funds.
Adrian Hull, previously the co-head of fixed income alongside Snowden, will now take sole responsibility for the fixed income team.
The fund manager exits affect £4.3bn worth of sterling funds and $1.2bn (£940m) worth of global funds.
Buy lists drop Kames
Fundcalibre has already confirmed it is removing the Investment Grade bond fund, which will now be run by existing co-manager Euan McNeil and newcomer Grace Le, from its buy-list. Darius McDermott, managed director of the funds research agency, said the fund had been on the preferred funds list for many years. McNeil and Le will also co-manage the Investment Grade Global Bond fund.
Meanwhile, AJ Bell has been vindicated by its decision to remove Kames fixed income products from its favourite funds list when David Roberts and Philip Milburn exited in August 2017, said head of active portfolios Ryan Hughes.
The quadruple exit was a “surprise” and a “serious blow” for Kames, Hughes said. “This has really ripped the heart out of the experienced team at Kames and leaves their capability significantly weaker.”
Morningstar has not yet placed the funds under review but said it would be speaking to senior management about instability from the significant amount of turnover in the fixed income team over the last three years. “The high yield desk in particular now looks fairly sparse and lacking in experience so an external hire could be on the cards in due course,” said senior manager research analyst Louise Babin.
The Twentyfour Corporate Bond, Artemis Strategic Bond and the Baillie Gifford High Yield Bond funds are alternatives for Kames investors looking to shift money elsewhere, Hughes said. “As a result of these departures, investors will need to think hard about whether the capability is strong enough in the short term or whether they would be better served looking elsewhere.”
Kames Capital sterling fixed income funds hit by exits
| 6m | 1yr | 3yr | 5yr | AUM | |
| Kames Absolute Return Bond B Acc GBP in GB | -0.14 | 0.07 | 2.51 | 5.43 | £1.8bn |
| IA Targeted Absolute Return TR in GB | -2.17 | -2.53 | 2.08 | 8.13 | |
| Kames Investment Grade Bond B Acc in GB | -1.69 | -1.83 | 11.25 | 24.83 | £1.5bn |
| IA Sterling Corporate Bond TR in GB | -1.41 | -1.57 | 10.59 | 21.24 | |
| Kames High Yield Bond B Acc in GB | 0.00 | -1.01 | 11.40 | 15.81 | £683m |
| IA Sterling High Yield TR in GB | -0.99 | -1.75 | 12.98 | 15.95 | |
| Kames Strategic Bond B Acc in GB | -0.60 | -1.09 | 7.52 | 11.79 | £311m |
| IA Sterling Strategic Bond TR in GB | -1.35 | -2.16 | 9.07 | 16.52 |
Source: FE Analytics
Kames Capital global fixed income funds hit manager exodus
| 6m | 1yr | 3yr | 5yr | AUM | |
| Kames High Yield Global Bond B Inc USD TR in GB | 4.71 | 5.61 | 36.99 | 57.53 | $182m |
| Kames Investment Grade Global Bond B Inc USD TR in GB | 3.15 | 1.95 | 29.43 | 53.63 | $239m |
| Kames Strategic Global Bond B Inc USD TR in GB | 3.30 | 3.82 | 26.05 | 43.51 | $601m |
| Kames Short Dated High Yield Global Bond B Acc GBP in GB | 0.03 | -0.54 | $225m | ||
| Bloomberg Barclays Global Aggregate Corporates TR in GB | 1.86 | 1.07 | 27.46 | 38.42 |
Source: FE Analytics
Kames: ‘We operate in a very competitive market’
Kames said the fund managers left the business to pursue other interests.
“We operate in a very competitive market, one where we have seen a good degree of change recently across the whole sector,” said chief investment officer Stephen Jones.
“We are not immune and while it is always disappointing to lose members of the team, it allows us to promote from within and refresh and recruit where appropriate and necessary.”
The fund house uses a joint manager structure on all funds.
Mark Benbow will become co-manager on the high yield funds alongside existing co-manager Jack Holmes. Rory Sandilands, who has co-managed the £461m Sterling Corporate Bond fund with Iain Buckle since August 2017, joins the Absolute Return Bond fund with existing co-manager Colin Finlayson.
Finlayson also joins the Strategic Bond and Strategic Global Bond funds with current co-manager Alex Pelteshki.
