F&C assets rise despite outflows

Although the group does not report its full year’s inflows and outflows of funds until March, it recorded a rise in assets from £118.6bn in September 2004 to £124.8bn at the end of December. However, according to a report from Morgan Stanley last week, some £44m exited the unit trusts of the newly merged group over four months to October 2004.

A day after the release of the Morgan Stanley report, F&C lost its second bond fund manager to Artemis in the past month. Alex Ralph, deputy manager on the F&C Strategic Bond, Maximum Income Bond and Extra Income Bond funds, left the group last week to team up with the funds’ former manager James Foster in April.

This move has prompted Chelsea Financial Services to take the £235m Strategic Bond fund, now managed by Fatima Luis, off its recommended panel of funds.

Managing director Darius McDermott says: “After careful consideration we have taken the fund off our list of five bond funds we recommend. We kept it on the list when Foster left, but despite the group’s claims that Ralph’s departure won’t affect it, the fund has now lost two-thirds of its team in the last month.”

Another concern among intermediaries is current lead manager Luis’s reported pregnancy. While F&C refused to comment or confirm this, Meera Patel at Hargreaves Lansdown says it would have a bearing on whether her firm continues to recommend the fund.

“We will decide next week whether or not we keep the Strategic Bond fund on our Wealth 150. Despite her promotion to deputy manager, I am not convinced Ralph had any more input into the funds than she did before Foster left. It’s likely we will put the fund on hold and review the situation when she and Foster join Artemis in April.”

Artemis has already confirmed it will launch a retail bond fund for Foster, and now Ralph, soon after their arrival. Nick Wells, product and communications director at the group, says it is too early to speculate on the nature of the fund, but adds that the firm is planning to build up a range of fixed income funds over time.