Five of St James’s Place’s funds, including UK equity mandates run by RWC and Majedie, are on an internal “watchlist” after the group’s fund board flagged issues with value being delivered in its inaugural value for money assessment.
Based on the Financial Conduct Authority’s seven criteria, SJP concluded its funds offer “good value” overall and it applied a ‘green’ rating to all areas of assessment except fund performance where the ratings varied.
It flagged five funds as ‘red’ for having attributes which challenge whether overall value is being delivered and 17 as ‘amber’ for only “broadly delivering value”.
Only 17 were awarded a ‘green’ rating and deemed to deliver good value. This amounted to fewer than half (44%) of SJP’s 39 funds being given a clean bill of health against the FCA’s criteria.
Lang Cat director Mike Barrett said: “The good news is they appear to be taking this as seriously as one would hope, with the report being well laid out and a number of funds put on the ‘watchlist’.
“Ultimately it is for their customers to decide whether they are receiving value for money with their investments, and I’m sure this report will help them make this assessment for themselves.”
Funds on the watchlist
The funds on SJP’s watchlist are Multi-Asset, run by Invesco, Payden & Rygel and Schroders; Investment Grade Corporate Bond, managed by Loomis Sayles; UK & General Progressive, run by Blackrock and Majedie; Equity Income, managed by RWC Partners; and UK Growth, also run by Majedie.
SJP said the Multi-Asset fund has not fully achieved its stated objective of capital growth over the past five years, made worse by the market declines of early 2020, and had underperformed relative to the broader market. It had, however, performed in line with its Investment Association sector.
Investment Grade Corporate Bond was flagged for underperforming both its benchmark and IA sector over the same period, which SJP said was largely due to the fund’s hedging strategy. However, SJP said it had last month removed the interest rate hedging restrictions to closer align it with the broader market.
SJP said UK & General Progressive had not achieved its stated objective of capital growth over the past five years due to market declines in early 2020 and because of Majedie’s investment style which favours companies and industries that have underperformed in general. It also blamed poor performance from the individual companies selected by the fund manager.
“The fund is currently under a heightened level of monitoring to determine whether changes to the investment strategy or fund manager would improve performance,” it added.
SJP said the Nick Purves-managed Equity Income fund had not achieved its stated objective of capital growth or the required level of income over the past five years. It has underperformed both its benchmark and IA sector over the same period.
“However, this is heavily influenced by the market declines of early 2020, prior to which the fund was meeting its capital growth objective,” SJP said.
Purves also runs SJP’s High Income fund alongside Columbia Threadneedle’s Richard Colwell which they took over from Neil Woodford who was booted from the mandate days after his equity income fund suspended.
The UK Growth fund was also pulled up over its inability to meet its objective of capital growth over the past five years and for underperforming both its benchmark and IA sector over that time. As a result, the fund is under a heightened level of monitoring.
SJP said in the report: “Using these seven assessment areas, we conclude our fund range offers good value. Our fund charges are appropriate in the context of the overall service we provide, and we successfully pass on economies of scale where we can.”
