Liontrust Asset Management is merging away a pair of underperforming legacy Neptune funds as manager Mark Martin departs.
The asset manager confirmed it would be combining the £88m Liontrust UK Mid Cap and £10m Opportunities funds, which have been run by Martin (pictured) since launch, with the Anthony Cross and Julian Fosh-led UK Growth fund.
Liontrust said the merger, subject to regulatory approval, was in the best interests of investors who “will benefit from the economies of scale of a larger fund” as well as Cross and Fosh’s long track record and “proven Economic Advantage process”.
It added Martin had been placed on gardening leave “with immediate effect” and would be exiting the business in due course.
The news follows hot on the heels of Aberdeen Standard Investments’ decision to shutter Andrew Hunt’s flailing UK Recovery Equity fund, which Portfolio Adviser revealed on Tuesday.
Martin had been at Neptune since 2008. After launching the UK Opportunities fund, followed by the UK Mid Cap fund, he worked his way up to become head of UK equities in 2014. He moved to Liontrust when it acquired Neptune last October.
While his UK Mid Cap fund has outperformed the IA UK All Companies sector since launch, returning 274.8% versus the sector’s gains of 159.9%, in recent years performance has taken a turn and assets in the fund have shrunk.
The fund is 11th from the bottom of the IA UK All Companies sector on a three-year view, down 24.7% against the average peer’s losses of 4.1%, and Martin’s UK Opportunities fund is also in the bottom quartile having lost investors 16.3% over the same timeframe.
Cross and Fosh’s £480m UK Growth fund by contrast is up 7.3% over the same time period.
Holly Cassell had assisted Martin on the mandates since 2014, becoming a deputy manager in May 2017. But she left Neptune less than four months later on a two-year sabbatical to advise the UK government on its Brexit strategy.
At the time of Cassell’s departure the UK Mid-Cap fund had around £580m worth of assets under management, while the UK Opportunities fund was double its current size at £20m.
Martin’s funds are the latest to disappear this year as the tough market conditions following the coronavirus outbreak and new value for money requirements from the Financial Conduct Authority have forced asset managers to make tough decisions about underperforming funds.
In addition to ASI liquidating Hunt’s ASI UK Recovery Equity fund, Jupiter shuttered a pair of funds in February and booted Steve Davies off its £527.6m UK Growth fund. Baillie Gifford also closed a pair of bond funds, while Invesco merged two of Mark Barnett’s income strategies as it showed him the door.
Liontrust has yet to publish its value assessment but said in its annual report the document would be published later this year.
See also: Value assessments expose ‘scandalous’ inaction over investors in legacy share classes
