The £109m Old Mutual UK Select Equity fund will switch to an active discretionary approach with the appointment of Simon Murphy, manager of the £612.7m M&G UK Growth fund since April 2004.
The Old Mutual UK Select Equity fund, launched in 1971, changed to an active quantitative method when Richard Moore left as manager in October 2006. It has been managed by the M&G quant strategy team, and will continue to be until Murphy’s arrival in March, when it will switch back to an active stockpicking approach.
Murphy’s replacement at M&G is Garfield Kiff, deputy manager of the £2.9 billion M&G Recovery fund since 2002. He assumed management of the M&G UK Growth fund with immediate effect, while Mike Felton continues as deputy manager. Murphy is on three months’ leave before he can join Old Mutual.
According Simon Wilson, head of marketing at Old Mutual, the decision to move the UK Select Equity fund to active discretionary management is not owing to poor performance but because the opportunity to recruit Murphy arose.
However, the fund’s performance over the past year has not been strong. Over one year to December 10 it is third quartile, according to Morningstar. It returned 3.4% compared with an IMA UK All Companies sector average of 4.56%. Over six months the fund fell 3.09% compared with a sector fall 2.76%.
Wilson concedes that the fund’s performance “hasn’t been as good as we’d hoped”.
Meanwhile, the M&G UK Growth fund, managed by Murphy since 2004, is first quartile over one year. It returned 9.36% compared with an average return of 4.56%. Over six months it returned 1.19% compared with a sector fall of 2.76%.
Wilson says Murphy’s management style is a perfect match for the Old Mutual UK Select Equity fund. “His approach is very well suited to what our customers are looking for,” he says. “It’s a perfect match and catch. It’s also what our customers are actually used to in this area of the market. They are much more used to buying discretionary stockpickers.”
Following the switch in approach, Old Mutual will have four quant funds and 11 stockpicking funds in its onshore Oeic range.