Rathbones eliminates Facebook from global fund

Rathbones has removed its entire holding in Facebook from its Global Opportunities fund, with the fund manager saying the company has lost its consumer trust, but several investors continue to have large holdings in the stock.

Rathbones eliminates Facebook from global fund

Despite the stock listing in the Rathbone fund’s top 10, the recent privacy issue around Facebook and Cambridge Analytica has caused the firm to remove the social media giant from its portfolio.

Fund manager James Thomson (pictured) said it was “prudent” to “steer clear for now” as the real fireworks could come when Facebook reports its quarterly results.

He said: “Having entered the stock almost five years ago, in 2013, we feel the bombardment of advertising and the exploitation of personal data are polluting the appeal of Facebook. In its pursuit of profit, Facebook is losing its consumer trust.

“Evidence of Facebook fatigue will be unmasked if there is a marked deterioration in its time-spent and engagement metrics. Perhaps advertisers might start to question the integrity of its advertising reporting data. These are both triggers for a crisis of confidence that could cause the stock to crater.”

On a three-month basis, Rathbones’ Global Opportunities fund has returned -3.8%, compared with -6.8% for the IA Global benchmark. This period coincides with Facebook’s blunder which saw its share price plummet.

Last week, Nordea announced it was “pulling the brake” on investments in Facebook for its sustainable funds because of the risks related to governance around data protection which “may have been severely compromised”.

Tom Walker, manager of the Martin Currie Global Portfolio Trust (GPT) said he also pulled money out of Facebook because of concerns, but continues to hold the stock.

Largest holdings

According to FE data, 87 funds still hold Facebook.

Morgan Stanley’s Global Opportunities Fund tops the list with an 8.78% holding, followed by Baillie Gifford’s Long Term Global Investment (7.36%) and Axa’s Framlington Global Technology Fund (7.35%).

FundHolding
Morg Stnly – Global Opportunity – Oct 128.78%
Baillie Gifford – Long Term Global Growth Investment – Apr 177.36%
AXA – Framlington Global Technology – May 997.35%
SJP – International Equity – Feb 976.36%
Janus Henderson – Global Technology – Nov 846.40%
T. Rowe Price – US Large Cap Growth Equity – Nov 036.07%
Natixis – Loomis Sayles U.S. Equity Leaders – Apr 135.70%
T Rowe Price – US Blue Chip Equity – Feb 035.66%
Kames – Global Sustainable Equity – Apr 165.62%
Thesis – Eldon – Feb 075.10%
Neptune – Global Technology – Dec 155.01%
Invesco – Global Technology – Nov 004.90%
Baillie Gifford – American – Mar 024.70%

Several funds with Facebook in their top 10 holdings have underperformed over a three-month basis against their benchmark.

The Kames Global Sustainable Equity funds produced a return of -8% against -6.90% for the IA Global benchmark. Natixis Loomis Sayles US Equity Leaders fund underperformed, with returns of -8.45% versus -7.72% for the IA North America benchmark, as did Janus Henderson’s Global Technology fund with returns of -6.61% against -5.01% for IA Technology & Communications sector.

Meanwhile, investor confidence appeared to have restored yesterday as Facebook’s share price rebounded and was up 4.5% from the previous day’s close, following chief executive Mark Zuckerberg’s testimony to Congress.

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