View the article online at http://citywire.co.uk/money/article/a602407
Widows dumped UK shares when the computers took over
Fund managers have complained that a shake-up at the investment arm of Lloyds Banking Group caused share prices to fall.
Fund managers at Henderson have complained that rival firm Scottish Widows Investment Partnership (Swip) caused share prices to fall after it scaled back active fund management in the UK earlier this year.
Swip, the investment arm of Lloyds Banking Group, slashed the size of its fund management team in April as it moved the £54 billion in its UK funds to a computer-driven 'quantitative' strategy.
Sometimes dubbed 'black box' the quant approach involves in putting huge amounts of stock data for computers to process. Stocks are then chosen from a list that the computer has screened, thus requiring fewer analysts and fund managers. Those fund managers that remain at Swip are mostly employed on global or specialist equity funds.
The change require a total reorganisation of Swip's portfolios which, according to the managers of the Henderson UK Absolute Return fund, had a big impact on the stock market as the firm dumped large stakes in firms.
Swip had held big positions in Berkeley Group (BKGH.L) (15.2%), Tullett Prebon (TLPR.L) (12.7%), DS Smith (SMDS.L) (7.8%), Resolution (RSL.L) (10.35%), UBM (UBM.L) (6.8%) and Reed Elsevier (REL.L) (6.9%). ‘Following the announcement by Swip we observed very active selling/shorting of these Swip names,’ managers Ben Wallace and Luke Newman said.
Housebuilder Berkeley is the only stock to have gained in value over the past three months. The rest have fallen heavily in contrast with the FTSE 100 which rose and fell to be flat over the period.
The managers added: 'Our overall exposure to Swip names is now materially lower and we are monitoring the situation very closely as many of these stocks appear very attractively valued.
'In an attempt to enhance our process, we will now take into account our overlap with other investment institutions as part of our portfolio construction process.'
Swip said: ‘It was made clear … we are moving a significant proportion of our high alpha equities to be managed on a “quant” (low risk alpha) basis.’
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In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.
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- Berkeley Group Holdings PLC (BKGH.L)
- Tullett Prebon PLC (TLPR.L)
- DS Smith PLC (SMDS.L)
- Resolution Ltd (RSL.L)
- Reed Elsevier PLC (REL.L)
- UBM PLC (UBM.L)
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