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Why M&G's corporate bond fund makes A-rated Clive Beagles sad
by Danielle Levy on Nov 21, 2012 at 13:38
JOHCM UK Equity Income manager Clive Beagles is concerned the retail distribution review (RDR) will only serve to make behemoth funds larger, and is backing Standard Life over Hargreaves Lansdown as a beneficiary of the new regulatory climate.
Beagles, who is Citywire A-rated and a Citywire Selection pick, said platform Hargreaves Lansdown was not currently on his radar as he views its valuation as rich, while highlighting the lack of clarity on the impact the RDR could potentially have for the Bristol-based company.
‘It is not necessarily clear how the RDR works out for them. We own Standard Life, which is a fast performing share and is much cheaper,’ Beagles said.
He also believes there is less downside risk associated with Standard Life in comparison to Hargreaves Lansdown, and is particularly positive about the investment Standard Life has made in its platform and in auto-enrolment solutions.
His comments came ahead of the firm's announcement on Wednesday morning that it has cut 139 jobs across its UK and Europe business.
Commenting on the potential landscape for fund management groups post-RDR, Beagles said he is concerned the RDR will simply cause the large funds that dominate their sectors to grow larger still.
He puts this down to commonality increasing between model portfolios run by wealth managers and IFAs on the back of more stringent due diligence processes. In this space, Beagles owns Aberdeen Asset Management.
‘The largest four to five funds have dominated each individual sub-sector and the RDR accelerates that,’ he said, highlighting the fact that in Asia Pacific equities the top three houses run around 70% of the assets in the sector.
‘Model portfolios created by wealth managers and IFAs have all got the same bloody funds. I think it is quite dangerous,’ Beagles added.
Similarly, he is concerned about the amount of money that has gone into corporate bond funds, particularly the M&G Corporate Bond fund.
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