M&G unsettles investors as manager exits revamped fund

Jamie Horvat replaced less than 18 months after a shake up of the £2bn strategy

M&G Investments has unsettled investors as it announces Jamie Horvat (pictured) has exited as manager of the £2.1bn Global Themes fund less than 18 months after a revamp of the mandate.

Alex Araujo will take over with immediate effect. M&G said Araujo would bring a fresh approach but said there would be no change to the fund objective or policy.

The fund has suffered average monthly outflows of £21.1m over the last two years with the September 2017 shake up appearing to have little tangible effect, according to Morningstar data.

In 2017, the asset manager switched the name of the fund from M&G Global Basics to the M&G Global Themes fund and changed the “restrictive” investment policy to ensure the fund could invest at least 80% of the portfolio in global equities with no restriction on sector, size or geography. It focuses on four structural trends of demographics, environment, infrastructure and innovation, with ESG integrated into his investment process.

Anton Oliver, M&G head of equities, said: “While we have decided to take the management of this portfolio in a different direction, I would like to thank Jamie for his hard work and contribution on behalf of our customers over the last five years at M&G, and wish him all the best for the future.”

‘Investors need stability’

Adrian Lowcock, head of personal investing at Willis Owen, said: “Investors need some stability in the fund to have any confidence especially as thematic funds can take some time to come into their own as the themes should be fairly long term.”

Elsewhere, Jason Hollands, managing director at Tilney, explained that this fund has been through a “fair amount of upheaval” in recent years. “While its spell as ‘dog’ fund has thankfully slipped into the mists of time, performance has been a little disappointing over the last year, but in part that will be down to a significant underweight to the US, which held up relatively well due to the dollar strength.”

However, he did not think the changes were due to short-term performance. Instead, he thought M&G was refining the proposition and appropriately allocating mandates across the team, due to its large number of global equity products.

Araujo steps up

Araujo, who joined M&G in 2015, will continue to manage the £26.6m M&G Global Listed Infrastructure Fund, which he launched in October 2017.  Stuart Rhodes, manager of the M&G Global Dividend Fund, who Araujo has worked closely with, will also become deputy fund manager of the M&G Global Themes Fund.

Lowcock said Araujo was a relatively new hire. “I would like to see things settle down for the next few years.”

Oliver said he Araujo would bring the energy, passion and insight to the fund as he had already demonstrated on the Global Listed Infrastructure Fund.

Jonathan Miller, director at Morningstar, said: “It’s fashionable at the moment to hone in on themes, because they sell. But we also know they can quickly become fads. Investors need to understand what a fund’s remit is. Chopping and changing is far from ideal.”

Morningstar dropped the M&G fund prior to its first revamp in August 2017.

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