Nurs conversion brings advantage of flexibility

Bambos Hambi, head of MultiManager funds at Gartmore, answers questions from Frances Hughes.

Q. The recently announced changes to your MultiManager range of funds involve amending the names of the funds, changing payment frequency and the adoption of the non-Ucits retail scheme. How do you explain this revamp of the range?

A. In terms of the Nurs structure, there are two reasons. By February next year, every single fund has to choose whether it is Ucits III or Nurs. We have been aware of that deadline approaching and have been proactive about it.

Until this year, if you had a Nurs, the government did not allow for it to be Isa or Pepable. It took the Inland Revenue nine months to make that happen. We were one of the first to approach it to make the change, using the Investment Management Association as our voice. It gave us the impetus to see whether we should bring this forward to the rest of the range.

By February 2007, everyone has to decide. But we were one of the first to have Nurs, if not the first. The change in legislation and the extra flexibility that Nurs offers make more sense.

Q. Why have the funds changed now, 18 months after launch?

A. Because of the change in legislation at the end of last year, making Nurs funds Isa and Pep eligible, and because of the February 2007 deadline.

Q. Can you explain what advantages the Nurs structure can offer this range of funds?

A. Flexibility. The opportunities available are greater. Nurs allows certain investment funds that Ucits does not – for example, commercial property. Another example is private equity. Some of our competitors are looking at this, but we are not.

If you have Ucits III there is a lack of flexibility. You are capped at owning only 10% of a fund. Yet under Nurs there is no limit, which fits in better with what we are trying to do.

Q. Why the name change? Does that mean you got it wrong 18 months ago?

A. No. At the time we spoke to people and that was not the message we had. Gartmore had two cautious funds: Cautious Managed, run by Chris Burvill, and Portfolio Cautious Strategy, now called MultiManager Cautious. Before the name change, there was not enough clarification between the two. Now all the MultiManager funds are clearly named.

Q. Why did you not do it before?

A. We were not aware that it was going to be an issue.

Q. Why did you change the payment structure, from bi-annual to quarterly, of only one of the funds: Cautious?

A. Because that is the fund that pays a very good dividend. The Cautious fund is the one with the high yield, so there is more demand for regular payments.

Q. Would it be fair to say that the Cautious fund is the guinea pig of the range?

A. No, I don’t think so. The Cautious fund is our low-risk fund and was launched in answer to demand. Quite a few people copied our structure. We had a severe market in equities during 2000-2003. A lot of people were, and still are, using the Cautious fund as a first step back into investment.

Q. What do you hope to achieve through all these changes?

A. The primary aim is to achieve top-quartile performance with below- average risk and, if we have greater flexibility, it gives us greater opportunities to achieve that goal.

We pride ourselves in listening to what the intermediaries are requesting, and this is all part of that. We hope to grow and be one of the largest multi-managers out there.

Q. You say that demands from your client base are the reason for the changes. What kinds of clients made these suggestions?

A. We deal with intermediaries, so predominantly it came from independent financial advisers.

Q. Why did the Cautious fund adopt Nurs status when it launched in October 2004, while the rest have had to wait until now?

A. When we launched the Cautious fund in October 2004, it was one of the first Nurs funds on the market.

When we originally did our research with intermediaries, the message was that they wanted a product for their clients that was cautious, that actively allocated to cash, but also included commercial property as an asset class, which Ucits III would not allow.

Under the Nurs rules, we could have 100% cash or 100% property. We have marketed it with these asset classes in particular bands. Cash can be 0-30%, commercial property 0-20%, fixed interest 20-60% and equities 20-60%. So investors can understand what they are buying and that we are always going to be diversified.

Q. You say that you did a lot of research when your team joined Gartmore in November 2003. What kind of research and how did you do it?

A. The distribution arm of Gartmore, the sales guys, got feedback from talking to intermediaries. Gradually over time – especially over the past 12 months – it was all done via meeting people. We have got a fantastic distribution arm at Gartmore. They are a very good team.

Q. What feedback have you had from your clients, if any, since the changes were announced?

A. It is too early to tell as it has just been announced. I would be surprised if it is not positive, because we have listened and done what they wanted us to do.

Q. What does the future hold for you now?

A. One thing that we can see right now is that people are becoming more confident and comfortable in investing in a cross-section of funds and markets, whereas I would have said even six to nine months ago that there was a lot more caution around. It seems to be that risk appetite is picking up a little bit.

When we launched four of these funds on October 1, 2004, we had £330m under management; now we have £460m, and that momentum is building nicely.

We are hoping that with our range and clarity we will become even more popular. We believe we have got the right products in place to grow into the future and we are looking forward to the next 12 months – and a few years after that.

Bambos Hambi is head of MultiManager funds at Gartmore. He joined the group in November 2003, prior to which he was head of wealth management at Insight Investment following its acquisition of Rothschild Asset Management in January 2003. Hambi joined Rothschild in June 2001 as head of its wealth management division. Previously he worked for Friends Ivory & Sime, with special responsibility for fund of funds.