A lot of talk recently has been about events at JO Hambro, where outflows from that house’s UK Dynamic fund are running at around £8mn a day according to Morningstar.
Those outflows are in the wake of the fund’s manager, Alex Savvides, announcing his departure to Jupiter.
He is presently on gardening leave while the new management team, led by Mark Costar, makes the rounds trying to reassure clients.
We had a chat with Costar earlier this week, where he told us that his focus is on "exisitng clients" right now, rather than on new business. He attributed the outflows from the fund largely to wealth managers whose investment process meant they automatically sell a fund when a manager departure is announced.
"The clients we are talking with are quite supportive," he said.
Costar and JOHCM may face an uphill task, with the consensus currently being that an exit is prudent.
There is less uniformity in terms of where to place the money. Some will doubtless follow Savvides to his new shop, while others expressed an interest in placing their capital into funds run by Alex Wright of Fidelity.
They remarked on the striking similarity in the performance of Wright’s UK Special Situations fund and Savvides's UK Dynamic fund.
We have demonstrated the similarity over three years in chart form below.
Over a longer-term time horizon than three years, the funds have an almost identical 10 year performance with the UK Dynamic fund edging it, returning 72 per cent compared with 68 per cent for the Fidelity product.
Each has sharply outperformed the peer group over that decade, with the peer group returning 50 per cent in that time period.
Both funds are already widely owned by the allocators we monitor, with Fidelity Special Situations appearing in four portfolios and UK Dynamic appearing in seven, including one allocator that bought in at the end of 2023 - just a month or two before Savvides announced his departure.
Wright’s fund had no new buyers in 2023 and is £2.8bn in size, compared with just over £1bn for the UK Dynamic fund.
Savvides and Wright share a passion for financials, which is the sector they both have their largest exposure to. Each manager has about 25 per cent allocated there.
Meanwhile Savvides has 15 per cent in basic materials, compared with 13 per cent in Wright’s fund.
Both managers are lifers at their current firms, though that changes when Savvides joins Jupiter of course.
To draw a distinction, Costar's JOHCM UK Growth fund - which he has run since 2001 - has about 30 per cent invested in tech.
When there, he will be taking on several of the mandates run by Ben Whitmore, with the latter departing to set up his own operation.
Those manager moves are likely to see a lot of client capital sloshing across the city as battles ensue to capture flows at a tough time for the industry as a whole.
Asset Allocator will be keeping a beady eye on our databases to see how DFMs move during that period.
