Martin Currie steps back from UK in fund business overhaul

Martin Currie is closing down a large part of its UK equity-focused business and will launch a trio of Newcits funds alongside a Latin American fund in a bid to meet the changing demands of UK investors.

The revamp will see the Martin Currie merge its UK Growth Oeic into its Global fund and convert its UK Equity Income fund into a Global Equity Income fund. Both initiatives are scheduled to go through in October and the move will see UK Equity fund manager Jeff Saunders leave the firm.

James Fairweather and Neil Robson will continue to manage the Global Growth fund, while Alan Porter will assume control of the Global Equity Income fund.

UK equity weakness

The UK equity funds have struggled to stand up to the competition in recent years, with the credit crunch exposing weaknesses in their respective investment approaches.  

According to Lipper, in the three years to the end June the UK Growth fund has returned -25% versus a return of -16% on the FTSE All Share. The maximum drawdown was -39.3%.

The Equity Income fund has fared worse, returning -29.5% at a drawdown of 48.2%.

On the restructure the Scottish-based asset manager will have only one UK-focused equity fund, Ross Watson's closed ended Securities Trust of Scotland, which it says will become its key proposition for investors looking for income and long term capital growth through a balanced portfolio of UK investments.

The firm’s managing director of sales, marketing and client services, Andy Sowerby (pictured above) said the decision to stick with the closed ended fund was based on the retail distribution review (RDR).

He said: 'RDR will raise the profile of investment trusts. It will level the playing field between, making the difference between open and closed ended vehicles less relevant.'   

The 129-year old firm, which came to the decision after an extensive review of its funds business over the last 12 months, said the financial crisis has re-shaped the investment landscape.

This dovetails with institutional and retail investors becoming net sellers of UK equities, which has seen global equities becoming a core allocation for investors (see graph below) and emerging markets, seen as a long-term driver of growth, rising in prominence.