Analysis: Advisers return mixed verdict on “vulnerable” Gartmore

Advisers are split on the latest twist in the Gartmore saga after the news today that star manager Roger Guy is to retire from day-to-day fund management.

The news was compounded further by the departure of chief investment officer (CIO) Dominic Rossi as well as the announcement of a strategic review which may see the company sold or merged.

The results of the announcement have already seen shares in Gartmore plummet in value by almost 20% at 12.02pm on Monday.

Ben Yearsley, a senior investment manager at Hargreaves Lansdown, says the news draws a line on what has been an annus horribilis for the asset manager.

“Whatever way you look at it, this is another body blow for Gartmore following the Rambourg debacle”

He says: “As with all strategic reviews it will end up one of three ways, either it will be sold, merged or will stay unchanged. What no one can deny is that Gartmore is extremely vulnerable and what has not been addressed in this morning’s statement is what will happen to Roger Guy’s stake.”

Darius McDermott, the managing director of Chelsea Financial Services, says that Gartmore shareholders will not be the only ones disappointed as unitholders may also be concerned by the departures from the firm.

He says: “Whatever way you look at it, this is another body blow for Gartmore following the Rambourg debacle. Not only has it lost its star manager but also CIO Dominic Rossi. This will not only fundamentally affect the way European money is run at the investment house, but also the direction of the company. I believe the seeds of discontent were sown by the Rambourg incident and this has expedited Guy’s departure.” (article continues below)

Guillaume Rambourg quit Gartmore in July this year. He was previously co-manager of the group’s European Absolute Return fund alongside Guy, but was suspended from management duties in March following an alleged breach of internal dealing rules. He had returned in June as a senior analyst on the European large-cap team.

Advisers were more positive on the future of the European fund range. Gartmore says it is to combine its European large cap and all-cap teams into a single European equities team led by John Bennett as a result of Guy’s departure.

The new European equities team will be fully implemented before the end of the year with Guy available to help on a consultancy basis until May 2011. The firm says senior portfolio manager Darrell O’Dea is to leave after the European teams are merged. Guy’s European large caps team manages £3.5 billion of assets.

Adrian Lowcock, a senior analyst at Bestinvest, says: “Bennett may well be the key now for investors as he is an extremely experienced fund manager with a proven track record. We recently downgraded the European Absolute Return fund to a hold and we are likely to hold that position despite this announcement today.”

McDermott says: “Fortunately, for Gartmore it has another highly skilled European manager John Bennett in the building. Bennett is a seasoned European investment manager who has worked with closely with Guy over the calendar year.

“Highly skilled, Bennett has over 20 years’ experience of managing European equities and over 10 years of managing long-short portfolios. Another plus point is that he has a strong support team, which will now include European Large Cap investment analysts Leopold Arminjon and Tomas Pinto, as well as Moni Sternbach.”

Justin Modray, the founder of CandidMoney.com, says that while Bennett is a big name he has a big set of shoes to fill and that there may concerns for other unit-holders.

He says: “Another area that needs to be considered is whether other managers will look at today’s news and want to move on as a result.”

Yearsley says: “Gartmore has £20 billion of assets under management so it can survive but a good chunk was with Roger. They have other big name managers like Tony Lanning on the multi-manager team, but others will have to fill the void.”