Square Mile has ousted the R&M UK Equity Income fund from its Academy of Funds following the exit of long-standing manager Dan Hanbury.
Hanbury abruptly left River and Mercantile weeks after Martin Gilbert’s new venture, Assetco, announced its intention to acquire the business. He is set to return to his former home at Ninety One, which he left in 2006 to set up River and Mercantile, later this year.
Square Mile said Hanbury’s involvement was a “crucial aspect” of the R&M UK Equity Income’s AA rating and, as such, it had decided to remove the vehicle from its crop of 333 top-rated funds.
River and Mercantile has lined up former Schroders manager Matt Hudson to take over Hanbury’s £109m fund, while his £674m UK Equity Smaller Companies fund is to be handed over to George Esnor.
It is in the second quartile of the IA UK Equity Income sector over three years, returning 18.3% versus the sector’s 14.3%.
Liontrust Strategic Bond drops out of Academy of Funds
The Liontrust Strategic Bond fund also saw its A rating stripped in Square Mile’s latest ratings round-up.
As with the River and Mercantile fund, the decision came down to a key departure from the team – bond veteran David Roberts. Liontrust’s global fixed income boss is set to retire from the industry in August, with Phil Milburn and Donald Phillips set to carry on managing the £329m strategic bond mandate.
“Square Mile‘s analysts have a high regard for the remaining managers, but they believe Mr Roberts’ departure to be a significant hit to the small team, particularly given the extensive skill-sets required to manage a strategic bond fund,” the research house said.
James Milne and Richard Pease funds downgraded
Crux European was also jettisoned from Square Mile’s Academy of Funds in February due to performance issues.
The fund, co-managed by James Milne and Richard Pease, is third quartile over three years and on a five year-view trails the IA Europe ex UK sector, having returned 23.1% versus the average fund’s 32.8%. Its lacklustre performance has contributed to a fall in assets, which currently stand at £71.1m.
“The European equity space is highly competitive, with a range of actively managed funds adopting a variety of investment approaches. Following a review of this sector, Square Mile‘s analysts have decided to remove the Crux European fund’s AA rating,” the firm said.
Milne and Pease’s larger £747.2m European Special Situations fund was downgraded from an AA to an A rating due to the fact “some of the reasons for its underperformance are explainable”. It also languishes in the fourth quartile of the IA Europe ex UK sector, returning 20.6% over five years.
