By ADRIAN LOWCOCK 22/01/2009
Whilst the credit markets remain mired and banks are busy resolving their own problems before being concerned by the lives of others, we see more turbulence in the fund management world. As we’ve said before, we expect to see greater consolidation in this sector with the big players flexing their financial muscles and increasing their presence. In the last week we have seen further developments.
Liontrust
The resignation of the lead fund managers and directors Jeremy Lang (who manages both the First Income and First Growth fund) and William Pattison came as a shock. Between them the pair manage over 90% of Liontrust’s funds under management. Whilst it is expected that they will carry on managing the funds until January 2010, the loss of such influential managers will be difficult to handle so we suggest investors consider switching out. Our recommended alternatives include Artemis Income, M&G Recovery and AXA Framlington UK Select Opportunities.
Midas
Shares in Midas Capital fell 66% yesterday as the company warned that it is in talks with the bankers over a temporary restructuring of its debt. In the same statement, Midas confirmed that trading remained in line with expectations, the business was cash generative and they had met all payments on the £29.8 million of outstanding debt. Whilst it does not signal the end of Midas it does raise few concerns over their future independence.
Bestinvest currently rate three funds under the Midas, their Balanced Income and Balanced Growth funds, and the Midas Income and Growth Trust Plc. Existing investors should continue to hold, but we would caution against new purchases, until we receive further clarity on the future of the business.
New Star
Following a debt for equity swap, New Star is now majority owned by a syndicate of banks. John Duffield, founder and executive chairman of New Star has let it be known that he wishes to execute a quick sale of the business. After an initial round of bids for the group there is speculation that Schroders and Henderson have emerged as front runners. We expect to hear the result of this process in the near future.
In the meantime, the International property fund remains closed for redemptions, as does the Heart of Africa fund.