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6545.27 + 79 1.23% 04:35

SLI GARS head Munro: we will review once we hit £40 billion

Standard Life Investments director of multi asset investing and fixed income Euan Munro says he may consider closing the group's SLI Global Absolute Returns Strategies (GARS) fund once it hits the £40 billion mark.

Munro, who launched the strategy in 2005 and heads up the 25-strong GARS investment team along with head of multi asset fund management Guy Stern told Citywire: 'Our expectation is that things will get more difficult [after reaching that point.] No fund strategy can grow indefinitely without it impacting on performance but our experience in running a big mandate is that we can continue to implement strategies very quickly even dealing in the big moving parts of the global macro economy.'

'Around the £40 billion mark we need to stop and have a think about whether we can safely grow beyond that point but that is the number we have in mind. We have a full audit of everything that has ever made money in this fund going right back to the start and [£40 billion] was the size it was designed to be.'

The fund still has some way to go but had grown to just over £19 billion by the end of October and is currently registered for sale in 22 countries having recently tied up distribution deals in Japan and the US. It rolled out its offer across Europe  and in the Nordic region earlier this year.

The UK unit trust accounted for £13.2 billion of the assets.

It was the top performing fund among UK-domiciled Absolute Return sector funds in 2011 and since launch in July 2005 to the end of October, has returned 33% compared to the IMA Absolute Return sector's 10%.

SLI said that roughly three quarters of its assets were made up of UK investors and the remainder from overseas.  

The fund lost three key members to Invesco Perpetual in September, as the latter looks to launch a rival multi-asset proposition after poaching David Millar David Jubb and Richard Batty, but Munro told Citywire this had given him the opportunity to move Ian Pizer, Neil Richardson and Roger Sedewsky to cover the departing managers' expertise in rates, equities and credit respectively.

At the start of November Munro also recruited JP Morgan's Adam Rudd as an investment director to work as a derivatives stategist on the fund.

Munro said that no more senior hires were likely in the near future and that he would be looking to bring through further junior members of the team as well as recruit further graduates.

The fund is currently running around 30 different investment strategies and Munro is confident it will be able to withstand further departures if they occurred.

'The most important thing is that we have 25 individuals so we have the ability to lose some but to keep the integrity of our process. When I began this in 2005 it was just me and a couple of quants. The strategy team did not even plug into me.'

* There will be a full video interview with Euan Munro and Guy Stern next week as part of our Citywire Selection Edinburgh fund manager special.

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