Sanlam is making a fresh start in fixed income with a £200m team acquisition 18 months after its well-regarded strategic bond managers defected to Man GLG.
The £5.3bn fund house will bring over a trio of funds from Tideway Investment Partners, including the Hybrid Capital Bond fund, which topped the Investment Association Sterling Strategic Bond sector last year. Tideway, a wealth management and financial planning business, supported the move.
Peter Doherty (pictured), formerly Tideway’s CIO, will become head of fixed income.
The rest of the team includes fund managers Guillaume Desqueyroux and Darren Reece, plus portfolio and research assistant Chris Turdean.
The Tideway GBP Credit and High Income Real Return funds are also part of the acquisition and will be rebranded with the Sanlam name from 20 April.
Tideway wanted institutional home for funds
Tideway managing director James Baxter said he had been working with Doherty “for some time” to find a “larger institutional home” for the wealth manager’s Ucits funds.
Baxter said: “The funds have been and will remain an important part of the Tideway Wealth Management proposition, whilst allowing Tideway flexibility to deliver great outcomes through relationships with a variety of other third-party asset managers.”
Investors would benefit from economies of scale and extra research resources, he added.
Sanlam had lost fixed income capability to Man GLG
Sanlam has had a hole in its fixed income offering since September 2018, when fund managers Craig Veysey and Francois Kotze jumped ship to Man GLG and took the firm’s strategic bond fund with them.
The fund held £290m at the time of the move, which has grown to £410.26m.
> See also: Man GLG acquires Sanlam bond fund in ‘forced’ sale
Tilney managing director Jason Hollands said the loss of the strategic bond fund had been a setback at the time as it had been one of the largest products in the boutique manager’s stable.
“They are now having to start afresh in the asset class,” Hollands said.
“While the team at Tideway are low profile, the deal does bring an existing product and assets to the table, from which Sanlam can rebuild their fixed income presence.
“The pace at which this will happen, in large part probably depends on their existing client bank and take up by their private client managers.”
Tideway versus Man GLG strategic bond funds
The £122.4m Tideway GBP Hybrid Capital Bond fund, managed by Doherty, is the largest product to join Sanlam as part of the acquisition.
A press release on the Tideway Investment Partners website, dated 7 January, touts the fact the fund topped the IA Sterling Strategic Bond fund sector in 2019, a feat it also achieved in 2017. Its chart-topping returns in 2019 were 15.79%, according to FE Fundinfo.
The Man GLG Strategic Bond fund, which sits in the same sector, delivered 11.5%. The pair also took over another Man GLG fund, which is also called the Strategic Bond fund, but is UK rather than Dublin domiciled.
But both funds have performed poorly during the coronavirus market sell-off with Tideway GBP Hybrid Capital Bond falling 12.95% while the Man GLG fund has fallen 12.39% since 20 February, according to FE Fundinfo.
The £94.3m Tideway GBP Credit fund, which also sits in the same sector, fell 5.77% over the period.
Tideway GBP Hybrid Capital versus Man GLG Strategic Bond fund performance
| 1m | 3m | 6m | 1yr | 3yr | |
| Tideway GBP Hybrid Capital Bond | -4.81 | -10.05 | -5.16 | -1.37 | 10.62 |
| Man GLG Strategic Bond | -6.80 | -12.20 | -9.70 | -5.42 | 3.98 |
| IA Sterling Strategic Bond sector | -1.98 | -5.35 | -3.61 | 0.11 | 4.45 |
Source: FE Fundinfo
Veysey and Kotze front up on disappointing coronavirus hit
In the latest factsheet for the Man GLG Strategic Bond fund, Veysey and Kotze fronted up on the fund’s losses of 12.3% in March in 13.3% in Q1 2020.
“We are incredibly disappointed for the fund’s investors that investment performance has been so poor in the extremely volatile period of the last month. We underestimated the impact of Covid-19 that has now become a ‘Black Swan’ event for the global economy.”
Energy sector bonds had hurt performance during the month, while currency and credit default swaps contributed positively. The pair added to high-conviction investment grade names, such as Tesco and GE during the month, and was defensive on duration with short positions across US 10- and 30-year futures.
They said: “We are very cautious about the size of fiscal stimulus, and the inevitable large budget deficits that will require significant government bond supply in upcoming periods. In an environment with QE, history has taught us that investors will sell their government bonds at the historically low yield levels offered, and buy higher yielding corporate bonds and equities.”
