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DFM to close ‘stellar’ in-house fund over conflicts of interest

DFM to close ‘stellar’ in-house fund over conflicts of interest

Tavistock, the new owner of Sterling McCall Wealth Management, is to shut an internal fund of funds so that its discretionary fund managers do not allocate to their own products.

The group acquired Blacksquare’s Acumen Defensive Portfolio fund earlier this year, which is managed by Christopher Peel and invests in other funds including Odey Absolute Return and Ruffer Total Return.

Peel (pictured) has now become Tavistock’s chief investment officer, acting as one of six discretionary fund managers for the firm, and one consequence of this will be the closure of Acumen Defensive.

‘We don’t feel it is appropriate to be investing clients’ money in our own funds,’ he told Wealth Manager.

‘It’s a pity we’re shutting it but we can’t in good faith allocate to our own product.’

Acumen Defensive has returned 11.2% since inception in 2010, while its benchmark Ucits Alternative Funds of Funds index has lost 9%, a performance record that Peel described as ‘stellar’.

But as well as closing that fund, Tavistock will be launching two new funds this month: Acumen Conservative and Acumen Progressive. Both will be passive-only strategies.

‘The rationale for launching the two new funds is really to deliver cost savings,’ Peel explained, as it was cheaper to deal in exchange-traded funds for clients through a pooled vehicle than individually.

‘I’m surprised the FCA hasn’t investigated the cost of those dealings,’ he added. ‘It gets swept under the carpet.’

Both of the new Acumen funds will have annual management charges of 0.75%, and estimated ongoing charges of 1.16%.

In March the FCA revealed that it would launch a probe into how wealth managers use in-house funds.

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