Fund selectors have downgraded their ratings for the £953m Axa Framlington Managed Balanced fund after changes in management.
This week Axa Framlington’s Jamie Hooper was promoted to co-manager and assumed control of the UK equity portion of the fund.
Hooper will work alongside current manager Richard Peirson, who will retain overall responsibility for the fund’s asset allocation.
Peirson is also handing the fixed income portion of the fund to Nick Hayes, manager of the $480m offshore AXA World Funds Global Strategic Bonds fund.
The move has resulted in the fund being removed from Hargreaves Lansdown’s Wealth 150+ fund list and being downgraded by Square Mile from an AA rating to A rated.
Square Mile senior investment research analyst John Monaghan says Hooper’s appointment is the biggest change resulting from the team moves as the UK equity mandate makes up more than 45 per cent of the fund’s allocation.
However, Monaghan says: “Jamie has a strong track record and we think this is the beginning of a succession for Richard.”
Perison confirmed that the move is “the natural next step for the fund as Jamie will eventually take the reins as lead manager”.
Monaghan says there is no immediate concern about Hayes’ new responsibilities. He says: “On the fixed income side of the fund, there is a fairly tight mandate which is to track down the volatility risks on the equity side.”
Peirson says of the fixed income manager switch that “it makes sense to have a specialist managing this, in the same way that it does with overseas equities. I am confident that these changes will ensure the fund continues to deliver the solid risk adjusted performance our clients have come to expect.”
Although the fund is “unlikely to undergo any drastic changes” under the new management, Hargreaves Lansdown is also wary of the changes leading to its removal from the Wealth 150+.
Hargreaves Lansdown investment analyst Heather Ferguson says: “Our conviction lies with Peirson, so we have removed the fund from the Wealth 150+ list of our favourite funds across the major sectors, while we monitor how it adapts to the change in management.
“This is not a recommendation to make any changes to a portfolio provided it continues to meet its objectives. We will keep in close contact with the AXA Framlington team during the transition period and will inform investors if our views change.”
City Financial head of investment research Gill Hutchison expects some changes in the fund, particularly to the fixed income portion now to be run by Hayes.
“Given a renewed focus on this portion of the fund from a fixed income specialist, we expect its composition to alter over time, but to continue to fulfil its primary function as a risk offset against the equity allocation, as well as generating an income.”
Chelsea Financial Services managing director Darius McDermott says it is a rare but sensible choice on a mixed product such as the Axa Framlington Managed Balanced fund to see a bond and an equity specialist focusing on their respective areas of expertise.
He says: “Continuity is important. Only if Peirson was to step down would it be a problem, but he maybe will at some stage.”
The Axa Framlington Managed Balanced fund has returned 21.2 per cent over three years against the IA Mixed Investment 40%-85% Shares sector return of 20.4 per cent, according to FE.