St James’s Place has placed funds from Wellington Management and Nippon on its internal watchlist after they scored poorly for performance in its second assessment of value (AoV) report.
Most of the wealth manager’s funds (32) received a “green” rating, indicating they delivered “good value,” while nine were given an “amber” rating for “broadly delivering value”.
But two funds, Alternative Assets and Japan, received a “red” rating for “having attributes which challenge whether overall value is being delivered”. This was an improvement on last year when five funds were flagged for poor performance by the fund board.
See also: SJP flags RWC and Majedie mandates for poor performance in debut value assessment
Alternative Assets and Japan funds burnt by value bias
However the Alternative Assets and Japan funds were the exception, falling from amber to red the second time around. SJP’s fund board called out both vehicles out for failing to meet their investment objectives of capital growth and lagging their respective benchmarks.
Alternative Assets, which has been run by Wellington since 2018, is currently sitting on losses of 21.4% over three years, according to FE Fundinfo, while its benchmark the ICE BoAML 3M Govt Bill is down just 1% in sterling terms.
Performance has been “heavily impacted” due to the fund’s “value investment style skew, trend-based strategies and the challenges faced by similar alternative asset funds in recent years,” the report said.
SJP said it has since taken steps to “refocus” Wellington’s strategy and plans on making “further developments” this year.
Similarly, Nippon’s value bias was one of the root causes for the Japan fund’s underperformance. The fund was badly bruised by the market falls during the pandemic, which pushed losses over three years to 13.5%. Its benchmark the MSCI Japan All Cap fund was up 18.9% over the same period.
Over the last year returns have improved with the fund generating gains of 11.8%, though this is still less than its benchmark (13.4%).
In March, SJP added Comgest to the mandate in a bid to boost performance. The wealth manager said it remains confident in Nippon’s ability to deliver long-term value for money, adding that Comgest’s “quality growth” style would help balance out Nippon’s value approach.
Four funds leap from ‘red’ to ‘green’
Overall SJP said more than 40% of its funds had seen an improvement in their overall performance score by achieving their objective and/or beating their benchmark over the assessment period.
Four of its funds made the dramatic leap from red to green a year later. These included the Multi-Asset mandate, run by Invesco, Payden & Rygel and Schroders and the Investment Grade Corporate Bond, managed by Loomis Sayles.
The underperforming Equity Income fund, managed by RWC’s Nick Purves, and the Majedie-run UK Growth fund, also made the switch from red to green but UK General & Progressive, run by Majedie and Blackrock, was only upgraded to an amber rating.
Despite a pickup in performance, SJP decided to merge its UK Growth and UK General & Progressive mandates with its UK Equity fund, led by RWC and Columbia Threadneedle, to create a single £4.6bn UK fund.
Majedie has been booted off the mandate, which will be run by six managers, including Baillie Gifford. It has also seen SJP’s UK Income fund yanked away with Artemis set to take over the mandate.
See also: SJP severs ties with Majedie as it merges away two underperforming UK funds
Further manager chops and changes
Between its first and second AoV reports SJP has made a number of chops and changes to the managers on its mandates.
Bluebay Asset Management has been added to its Global High Yield Bond mandate, joining existing managers Oaktree and Capital Four.
Meanwhile Burgundy Asset Management has been booted off the Global Quality fund, which will now be overseen by seven managers, including Impax, JO Hambro, Magellan and Ninety One.
Last July, Pzena, Sanders Capital and Artisan were appointed to run its Global Value mandate.
Adding more managers on each mandate forms part of SJP’s long-term strategy to improve consistency of returns and long-term performance by creating “asset class building blocks”.
