Miton’s George Godber and Georgina Hamilton’s decision to leave the asset manager may lead to an exodus of assets.
The duo managing the £869m UK Value Opportunity fund handed their notice in this week, and are joining Polar Capital to run a UK equity product, Fund Strategy understands.
Godber and Hamilton, who started at the firm three years ago when the fund was launched, have notice periods of 12 months and six months respectively.
Tilney Bestinvest managing director Jason Holland says investors may follow the duo to Polar.
Hargreaves Lansdown senior analyst Laith Khalaf agrees, adding: “People invest in that fund because of the managers, not because of Miton, so they might follow the duo if they build something similar at Polar.”
City Financial investment director Peter Toogood says it is going to be challenging for Miton to market the fund and make it competitive after the managers leave.
He says: “Miton is a small and mid-cap shop and offers very similar products to others. It’d be difficult to compete when there are around 269 UK All Companies funds. In the case of Miton, if you have three, all cap, mid cap and large cap funds, how are you going to promote them?”
“Looking at the notice period, which is quite long, the challenge for Miton is to arrange a smooth transition,” says Khalaf.
A statement from Miton said: “Miton’s focus continues to be on looking after the best interests of its clients as it recruits replacement portfolio managers.”
Shares in Miton Group initially fell 28 per cent after the announcement of the managers’ departure.
Chelsea Financial Services managing director Darius McDermott says: “It is difficult for these companies when they are listed and when something like this happens and they don’t announce it. They need to be careful.”
“The share price has already fallen so almost 30 per cent of their assets are at risk, meaning Miton needs to find a good replacement.”
Chelsea Financial has already downgraded the fund from buy to hold.
Khalaf says: “The share price already tells you the impact this move is having on the business.
“Miton relies on a very small number of fund managers. Their fund is worth a quarter of Miton’s assets so this is not great news. It depends who is going to replace them but it seems that Miton had put a lot of weight behind the duo.”
Assets under management at Miton rose 36 per cent to £2.7bn in 2015 with much of this helped by the “outstanding performance” of Godber and Hamilton’s fund. The fund’s assets grew from £211m at the start of 2015 to £783m at the end.
The fund has returned 14.2 per cent over one year, versus losses of 4.6 per cent by the IA UK All Companies sector, according to FE.
However, experts say the move is extremely positive for Polar, especially as the firm doesn’t have a large capability in the UK.
“Polar has been looking to expand and diversify the business for a while and currently they don’t have a UK mainstream proposition,” adds Toogood.
Hollands says: “Polar Capital is a multi-boutique and people there have a share of the business so it has an attractive business model.”