Stewart Investors is set to reopen three global emerging market (GEM) funds and one Asia fund, some of which have been soft-closed since 2004.
Tom Prew, head of St Andrews Partners, which is part of Stewart Investors, said the Global Emerging Markets, Global Emerging Markets Leaders, Asia Pacific and Latin America funds will re-open on 1 July.
First State Investments/Stewart Investors introduced a 4% initial charge on an array of its GEM range up to 16 years ago; the Asia Pacific and GEM funds were closed to new investors on 1 February 2004, while the GEM Leaders and Latin America Funds were closed on 7 September 2013 and 1 January 2012, respectively.
However, following a decline in assets under management the group confirmed it will remove the initial charge making the funds more accessible to new investors from next week.
In addition, the Asia Pacific fund is getting a new name and expanding its remit.
The group said on 22 May 2020 the Asia Pacific fund changed its name to Stewart Investors Asia Pacific and Japan Sustainability fund, to reflect the policy change to allow investment in Japan. The fund’s benchmark was also changed to the MSCI AC Asia Pacific index from previously the MSCI Asia Pacific ex Japan Index.
Soft closure was in the best interests of clients
Groups soft-close funds in a bid to stem flows that may be growing too large, putting outperformance and liquidity at risk. New investors were deterred from investing in the Stewart Investors funds, which tend to have a bias towards small- to medium-sized companies, by the 4% initial charge, but regular savers were still able to top up.
In a statement at the time, the group said: “We continue to believe that our first duty must be to existing investors by ensuring we manage the size of each fund under our management responsibly. We soft close or close funds when their size is near the maximum investment threshold that we are best able to manage.
“While we recognise the inconvenience this may cause, we strongly believe that soft closing or closing funds for the reasons above are in the best long-term interests of all our clients and part of our stewardship responsibilities.”
Prew said: “In 2010, we became worried the markets were getting too excited so we soft-closed a number of funds in 2012 and 2013.
“We have always been careful about capacity at Stewart Investors, we do not want to pass on liquidity risk to investors.
“Lots of assets have come out since then as investors hit retirement. The Latin America fund is very small now £120m – and we expect it to stay small even after we reopen next week.”
Using data from FE Fundinfo that only tracks the last three years, the Stewart Investors Global Emerging Markets fund had £683m in assets under management as at 26 July 2017, which has since fallen to £160m as at 26 June 2020.
The GEM Leaders fund was much larger three years ago, at almost £3bn, but similarly AUM has fallen significantly to £931m.
In the Latin America fund, AUM remained steady at around £180m for three years, up until the Covid-19 crisis in March/April when assets dropped. As at 25 June 2020, the fund AUM was £120m.
