by Alan O’Sullivan

UK fund selectors are still unableto access the skills of six ofEurope’s top 10 fund managers,but a fresh initiative byScandinavian groups is set tochange this situation.

Exclusive research by CitywireFund Manager Internationalmagazine reveals that whileBritain is still being deprived ofthe best continental managers,plans are afoot among topEuropean boutiques togain distributor status.

Fund ManagerInternational hasranked Europe’s Top100 Fund Managersbased on risk-adjustedperformance over thethree years to the endof 2006.

Europe’s top fund

manager, Gonzalo Lardiés,remains inaccessible to UKinvestors following his movefrom Metagestión to BanquePrivée de Rothschild Europe thismonth. The AAA-rated Spanishmanager gained the statusmanaging Metavalor, a Spanishequities fund.

Oslo-based boutique OdinForvaltning’s Lars Mohagenclaimed second place, with hisOdin Offshore fund.

Although this fundremains unavailable toUK investors, the groupis moving to launchmirror funds that will beUK-registered.

The group is planningto move into the UKwithin a year with fourregistered funds,including three which

invest in the Nordic region andthe Odin Europa fund.

The third best Europeanmanager, Filip Weintraub fromSwedish boutique StavangerFondsforvaltning, will also see his€3 billion Skagen Global fundregistered in the UK, once a pushinto continental Europe has beencompleted.

Other managers who featurein the top 10 and remain inacces-sible to UK investors includePeter Puehringer and ChristianHirschmann, managers of theZZ1 fund from ZZVermoegensverwaltung.

Keppler Asset Management’sDidier Rosenfeld is the onlyEuropean manager in the top 10who is currently available in theUK with his Global AdvantageFunds Major Markets HighValue fund.

www.citywire.co.uk 12 April 2007

by Charlie Parker

This week Citywire revealed the move of threeinvestment trust mandates from CloseInvestments to the newly formed Frostrow Capitalboutique. The change seems to have beenwelcomed by Close and is indicative of importantchanges taking place.

Firstly, it will probably mark the end of thehistoric Finsbury brand. The original FinsburyTrust, which later became Hansa Trust,spawned the Finsbury Growth & Income,Finsbury Emerging Biotechnology and FinsburyWorldwide Pharmaceutical trusts which left thefirm this week.

Now the Close Finsbury boutique has been

gobbled up by Close Investments, the firm isbelieved to be close to dropping the Finsburyname from its Oeic range. It seems unlikely thatformer Close Finsbury managing directorAlastair Smith will encourage the trusts to retainthe name in their new home with him atFrostrow Capital.

The change also shows that the firm has finallystarted aggressively focusing its business. It hasbeen running small funds with some of the highesttotal expense ratios (TERs) in the industry and thisclearly could not continue.

Close Investments deputy managing directorStuart Alexander said: ‘Organic growth is just notan option with equity funds.’

HSBC Investmentsto reopen Bric fund

An ease in capacity concerns has

encouraged HSBC Investments to

reopen its giant Bric (Brazil, Russia,

India and China) fund to the retail

market, writes Dylan Lobo.

The $2.7 billion (£1.4 billion)

HSBC GIF BRIC Freestyle fund is

run by Nick Timberlake and his

team from HSBC Halbis Partners,

the fundamental active arm of

HSBC Investments.

The fund hard-closed in June

2006 due to concerns that capacity

issues would affect performance.

However, the group has decided to

reopen the fund on the back of

growth in the markets it invests in

over the last few months.

HSBC Investments head of

emerging markets business,

Christian Deseglise, said: ‘Over

the past eight months, the markets

in which this fund invests have

grown in size and liquidity and

depth has improved. This has

increased capacity to a level

whereby it is now appropriate to

reopen the fund.

‘We will continue to watch the

capacity issues closely and are fully

prepared to close the fund again to

protect the interests of clients.’

Deseglise is confident on the

prospects for Bric countries

against the backdrop of supportive

global growth and liquidity, along

with buoyant macro-conditions in

Bric markets.

He also pointed out valuations

remain attractive and domestic

demand in the Bric economies is

growing, which provides solid

support for many equity sectors.

Small-caps prove best at

beating volatility – p3

Richards retreats from

Société Générale – p4

Resolution’s Clark

challenges Nimmo – p6

European stars set to cross the channel

Winners of theIMA Team Awardfor Excellence in

Investment Writing2005 and 2006

First for fund manager performance, news and analysisFirst for fund manager performance, news and analysisNº 162

Close moves out of investment trustsFrontRunnerFrontRunner

Lardiés: unavailable in the UK

Neptune European Opportunities Fund has been the top performer in its sector 3 years running.

Source: Lipper Hindsight, Europe ex UK sector, bid to bid,net income reinvested

* Cumulative performance since launch 29/11/02 to 28/02/07

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up stock selection. Companies are picked for their good

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from global trends. As such, the Fund is less correlated to the

Index than most European funds and could be an ideal core

holding for client portfolios.

For performance that’s out of this world, call Patrick Berton on

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THE TOP FUND FOR EUROPE AGAIN AND AGAIN AND AGAIN!

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www.neptune-im.co.uk020 3008 8000

% Annual returns to 28 February 2007 2006 2005 2004

Sector Average 12.0 30.0 15.6 37.5

Neptune European Opps 23.5 51.5 30.7 37.5

Position in sector 1 / 103 1 / 98 1 / 95 43 / 88

Since launch*

99.7

212.6

1 / 86

Neptune European Opportunities Fund

N-CitywireFund-April.indd 1 22/3/07 12:13:34 pm

by Dylan Lobo

During the first quarter of the 12months to April 2007, SmallerCompanies managers weatheredvolatility in the markets betterthan their large-cap rivals.

Despite the growingconsensus that large-cap stockslook cheap, funds focused on themarket did not handle themarket falls as well as small-capmandates.

An average return of 9.54%for European SmallerCompanies managers made itthe best performing sector in thefirst three months of theyear. Philip Dicken wasthe top performer in thesector, thanks to areturn of 14.4% on hisThreadneedle PanEuropean SmallerCompanies fund.

Meanwhile, theUK SmallerCompanies sectordelivered the

second best average at 5.5%.Paul Jourdan, who will be takinghis fund across to Noble FundManagers when he joins thefirm from First State in thesummer, was the bestperformer, returning 12.8% onhis First State British SmallerCompanies fund.

Elsewhere, the rise of Europeshowed no sign of dwindling onthe back of a recent report fromThomson Financial, whichshowed European stockmarketsare worth more than the USmarket for the first time since

the First World War. The European excluding

UK sector put in the thirdbest performance with anaverage return of 4.72%.

The sector also containedthe UK’s best overall

performing fund in the firstquarter, Willem Vinke’sJOHCM ContinentalSelect Values fund,which returned 16.6%.

Another winning sector wasUK All Companies with anaverage return of 2.8%. DaltonStrategic Partnership’s Glen Pratttopped the sector with a returnof 11.3% on his Melchior UKOpportunities fund.

Unicorn Asset Managementinvestment director JohnMcClure took the plaudits in theUK Equity Income sector,thanks to a 6.54% return on hisUnicorn UK Income fund. Thesector ranked 14th overall with a2% average.

Jupiter’s Simon Somervillewas the highlight in anotherwise disappointingmonth for Japan. He headedthe sector with a 4.4% returnon his Japan Income fundversus an average return of alittle more than 1%.

Bond fund managers alsocontinued to struggle. Out ofthe four fixed income sectorsGlobal Bonds delivered the bestaverage return at 1%.

NEWS

Small-caps prove best at beating volatility

by Charlie Parker

Scottish & Newcastle has beentipped as the hottest potentialprivate equity auction of thesummer.

The brewer has seen itsshares shoot up from a price of515p on 13 March to 620p by 7April. Since the rumour millbegan around the firm, whichmakes Fosters beer, some 14%of shares have changed hands.

Citywire understands,however, that M&G Recoverymanager A-rated Tom Dobellhas retained his stake ofaround 5.7 million as he awaitsthe opportunity to catch abreak on the next FTSE 100bid target.

M&G is set to benefit acrossits fund range as the M&GDividend fund managed byRichard Hughes holds around2.25 million shares.

AAA-rated Hughes alsoholds some 1.2 million sharesin the M&G Extra Incomefund. Collectively this givesthe group a stake of close to1% in the firm across its retailrange.

Whether the private equityhawks do eventually swoop onthe brewer or not, M&G canboast significant returns.

The majority of the group’sstake was bought inSeptember 2004 when theshares were trading at around

385p, although Dobell hasbeen adding to the stake asrecently as February.

The firm boasts strongbrand recognition across theglobe owning Fosters,Kronenberg 1664 among itsstable as well as Woodpeckerand Strongbow cider.

Should a merger be on thecards groups such as Carlsbergand Heineken have beentouted. Yet Carlsberg iscontrolled by a charitablefoundation which could createobstacles to a merger.

Either way the ‘no worries’way of life Fosters promiseswill sound sweet to the fundmanagement hands at M&G.

S&N provides a perfect brew for M&G’s fund range

www.citywire.co.uk 3 12 April 2007

Performance Highlights

SEI promise tomake volatility paywith fund launchUK retail investors will soon be able

to access SEI Investments’ quanti-

tative manager of managers (MoM)

fund, which aims to keep a tight

rein on volatility across the world,

writes Dylan Lobo.

The Dublin-domiciled SEI Global

Managed Volatility fund, which was

originally launched last September

for a select range of SEI’s client

base across the globe, will be made

available to UK fund selectors

within the next few months.

The fund aims to provide capital

appreciation by investing

primarily in developed market

equities. It looks to maintain a

lower level of volatility than the

broader market by investing in a

portfolio of securities which are

weighted by expected risk and

return rather than market capitali-

sation or industry.

The fund is jointly managed by

US-based firms Acadian Asset

Management and Analytic

Investors.

SEI Investments head of UK sales

Ryan Hicke, said: ‘We expect the

Global Managed Volatility fund to

provide a greater level of sophisti-

cation in the creation of portfolios

for high net-worth clients focused

on capital preservation or stability.’

SEI Investments’ MoM

philosophy runs around £94 billion

in assets.

Performance Highlights

NOT A LOT OF PEOPLE KNOW THAT...Tony Vine-Lott, director general ofPIMA does love to be beside theseaside and is hoping to take hiscustom-built 40ft sailing boat out for a spin around Croatia this summer. The boat is being spruced up in a

shipyard in Denmark, where Vine-Lott’s other 28ft boat was built.Citywire Courier is wondering, at6’6” tall whether Vine-Lott ishaving a long-boat made?

Jourdan: top performer in sector

SMITH ON FUNDS

12 April 2007 4 www.citywire.co.uk

It seems John Richards’ step back frommanagerial responsibility at Société GénéraleAsset Management (SGAM) in favour of activefund management has not worked out.

Richards, who joined SGAM in 1998 as managingdirector, has left the group less than six months afterhis return to direct portfolio management.

Richards, 46, was joint chief executive officer(CEO), along with founding chief operatingofficer Alex Buffet, until last October and waspreviously chief investment officer (CIO).

Officially, he wants to ‘spend more time withhis family’, although I would imagine adviserswill be little surprised if he reappears in the fundmanagement industry before too long in anotherrole. SGAM does not expect him to resurface inthe near future and, if he does, not in a‘traditional corporate asset management role’.

After Richards stepped down as CIO, the rolewas split with Michala Marcussen, head ofstrategy and research, now taking on the role ofhead of asset allocation, Hari Sandhu as head ofUK equities and Sarah Pohlinger as head ofEurope and emerging markets.

Last October Jean-Baptiste Segard, previouslyhead of corporate clients in continental Europefor SGAM and a member of its executivecommittee, took over the full CEO role.

At that time Richards said: ‘Managing moneyhas always been what I enjoy most. Ourbusiness is entering a new growth phase, so itis a good time for me to focus entirely onportfolio management, as there is the risk thatthere could be too many demands on my timein the future. This way, I can devote all myenergies to ensuring we deliver strong returnsfor our investors.’

With Richards gone, and Nicola Horlickalready established in another fund

The departure of John Richards could spell stormy times for Société Générale,

with pressure mounting on new CEO Jean-Baptiste Segard to improve performance

management business, only SGAM chairman Keith Percy remains of the threefounders. The group has suffered several high profile departures in recent years,including Peter Seabrook and Dino Fuschillo and more recently Hugh Sergeantand Richard Staveley, although other founder members of staff, for exampletechnology specialist Alan Torry, remain in place.

Richards was responsible for the £50 million SG UK Concentrated Core fund,which has delivered a total return of 40.54% since March 2004 compared with anaverage 56.07% from IMA UK All Companies funds and a total return of 59.08%on its FTSE 350 benchmark index.

He has handed this fund over to David Benson, the group’s head of UK researchand manager of an institutional UK equity portfolio, along with his £460 million

SG Balanced Managed and his £125 million SGStockmarket Managed funds.

Richards’ Managed funds boasted second quartilereturns within their IMA sectors over the last fiveyears but third quartile performance over a three-year time frame.

More broadly, SGAM’s funds generally do little toexcite investors. Of 23 IMA funds, 18 currently sitwithin the third or fourth quartile of their IMA peergroups based on their performance in the mostrecent 12 months. Of 21 funds with at least a five-

year history, 13 sit in the third or fourth quartile while only one boasts a topquartile performance.

SGAM proudly boasts of its Japan CoreAlpha fund, which ranks number one of62 funds in its peer group over the most recent 12 months, and has recruitedrecently in areas such as European/Eastern European fund management.

However, with no central CIO role, investors must hope the new CEO will helpto shake up performance. Almost 10 years ago there was a definite buzz aboutSGAM and the industry had high expectations. However, almost 10 years later, itseems groups like Artemis and New Star have stolen SGAM’s thunder.

Richards retreats from Société Générale

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50

60

FTSE 350IMA UK All CompaniesSG UK Concentrated Core Retail Acc

Feb-07Mar-06Mar-05Mar-04

Richards’ SG UK Concentrated Core fund has lagged behind the FTSE 350 benchmark index

Source: Lipper

Richards’ Managedfunds boasted secondquartile returnswithin their IMAsectors over the lastfive years

by David Smithdsmith@citywire.co.uk

IMA Team Award for Excellence inInvestment Writing 2005 & 2006

Citywire.co.uk

Don’t take ourword for it -That’s the view of the Investment

Management Association which

gave Citywire the Team Award

for Excellence in Investment

Writing 2005 & 2006.

Online or in print, Citywire brings

you the news and comment you

need to help you do your job.

Citywire Funds Insider™ New Model Adviser™ Fund Manager International™

Citywire Courier www.citywire.co.uk

SECTOR WATCH

Resolution’s Clark challenges Nimmo

12 April 2007 6 www.citywire.co.uk

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35Average UK Smaller Companies managerHarry Nimmo

Feb-07Nov-06Aug-06May-06Feb-06

Harry Nimmo posted a return of 31% with his

Standard Life Investment UK Smaller Companies fund

by Dylan Lobo

The Smaller Companies sector displayed resilience over the last 12 months inthe face of increased volatility in markets. The average fund manager return inthe sector was 17.2%.

Harry Nimmo was the most successful small-cap manager during thesetroublesome times. He returned 31% on his Standard Life Investment UKSmaller Companies fund, which controls around £300 million in assets.

Nimmo is well known for his bottom-up approach to stockpicking. Some ofthe key contributors to his outperformance include software firm AvevaGroup; online database and services provider Datamonitor; outsourcingservices company Mears Group; and industrial safety group Latchways.

Nimmo highlights a number of factors which have helped smallercompanies in recent months, including strong results and bid activity.

In his most recent quarterly update Nimmo outlines why he remains bullishon the long-term prospects for smallercompanies. He said: ‘The long-term potentialfor smaller companies is undiminished, theunderlying trading environment continues tobe robust and we will take advantage of anyfurther volatility to add to preferred positions.

‘We continue to focus on quality growthcompanies with strong and visible earnings.Such companies will hold their value in thelonger term, even during periods ofmoderating economic growth, and will benefitgreatly from any recovery.’

Hot on Nimmo’s heels in second spot wasResolution Asset Management’s David Clark,who returned 30.55% on his ResolutionAsset Smaller Companies fund.

The fund typically runs between 65 and 90 stocks and its biggest holding atthe end of February was power protection solutions firm Chloride Group at3.1%. ‘Recent growth has been broad and based in geographic and productterms and the combination of recent acquisitions and a restructuring projectshould lead to healthy earnings growth,’ Clark says.

Clark also likes engineering and construction company Severfield-Rowen,which accounted for 2.9% of the portfolio at the end of February. ‘Thecompany operates mainly in the UK and is currently enjoying high plantutilisation, an improving revenue mix and buoyant trading. A recentacquisition is performing well and ongoing upgrades to earnings forecasts areexpected,’ he says.

Clark anticipates more volatile times for the markets but believes small-capshave the capacity to overcome the turbulence.

‘The market is likely to remain volatile as concerns over the global economypersist, particularly over the short-term. Our view is that any setback will betemporary and we do not anticipate any significant impact on the UK smallercompanies market, especially as corporate activity continues,’ he says.

Citywire AA-rated Simon Knott took third place with a return of 28.35% onhis Discretionary unit trust.

Old Mutual Asset Management’s AAA-rated Daniel Nickols, who scooped the

Standard Life Investments’

Harry Nimmo has marked his

return to form by producing

the best performance in the UK

Smaller Companies sector over

the last 12 months

All graphs sourced to Citywire Financial Publishers www.citywire.co.uk (020 7840 2250)

Rankings based on 1 year MR* in UK Smaller Companies

sector at 10 April 2007

Sector TrackingName MR* error Contributing fund

David Clark 2.2697 5.6359 ResolutionAsset Smaller Companies

Harry Nimmo 2.1717 5.9454 Standard Life UK Smaller Companies

Daniel Nickols 1.7958 5.8875 Old Mutual UK Select Smaller Companies

Georgina Brittain 1.6122 4.1387 JPM UK Smaller Companies

Mark Davids

Paul Marriage 1.2694 7.2269 Cazenove UK Smaller Companies B

Managers ranked by their sector-specific manager ratio

*Citywire’s exclusive manager ratio (MR) is a measure of how much value inpercentage terms is added for every unit of risk taken on an annualised basis. An MR of 0.5 is considered good and over 1 excellent.

‘The long-termpotential forsmallercompanies isundiminished’

Harry Nimmo,Standard Life

SECTOR WATCH

How to read the performance tablesThis column highlights the manager’sperformance in discrete one year timeperiods. The figure takes into accounttheir work on the different funds theyhave run during the period under reviewwithin the IMA sector under analysis.

Discrete quarter-by-quarteranalysis of fund manager

This column identifies the funds currently managed by theindividual manager in the specific sector. Funds have to beactively managed funds available to retail investors to qualifyfor inclusion. This means passive funds and institutionalfunds are excluded from analysis.

www.citywire.co.uk 7 12 April 2007

He told Citywire: ‘Theportfolio is tilted towardsthese companies becausethey are likely to securenew contracts which arenot factored into analyst’sforecasts.’

Other key holdingsinclude Synergy Healthcare,a specialist provider of non-sterile and sterile productsto the NHS; training servicesgroup Carter and Carter,which runs Government-backed training schemes;and IT and software group Civica.

Only two fund managers delivered negative returns over the 12 months,including Canada Life’s Craig McDougall, whose dire period of form continued.McDougall has failed to beat the sector average in each of the last three 12month-periods and was the sector’s worst performer with a loss of 7.65% on hisCF Canlife UK Smaller Companies fund.

Paul Mumford also delivered negative returns over the 12 months, losing1.8% on his Cavendish AIM Retail fund. Former AAA-rated Mumford hasstruggled to recapture his form after losing his rating in August 2006.

The following five pages show five discrete years of fund-managerperformance data for the UK Smaller Companies and UK Equity & BondIncome sectors, broken down quarter-by-quarter in each year. CitywireCourier covers the 24 key unit trust sectors regularly.

Citywire All Stars fund manager of the yearawards in 2006, was the fourth best performingmanager in the sector. He returned 28% on hisOld Mutual UK Select Smaller Companies fund,which recently closed to new investment in a bidto protect performance.

It was also a good year for AAA-rated PaulMarriage, who returned 25.9% on his CazenoveUK Smaller Companies fund, which he launchedat the start of January.

Meanwhile, Stuart Harris gave Credit Suissesomething to smile about during a difficult fewmonths at the group. He was the seventh bestperformer in the sector with a return of 24.5% onhis Credit Suisse UK Smaller Companies fund,which he assumed control of in July 2005.

Harris applies a rigid structure to the fundwith around 30 stocks on a 1% weighting and amiddle core of 20 stocks with a 2% weighting.Top 10 holdings comprise around 30% of thefund at 3% bets each.

In an exclusive interview with Citywire lastmonth Harris said his focus on undervaluedgrowth and outsourcing stocks had driven theperformance of his fund.

The fund is currently weighted to outsourcingstocks because Harris expects the government’sspending review to focus increasingly on a rangeof government services, including healthcare andeducation.

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Average UK Smaller Companies managerDavid Clark

Feb-07Nov-06Aug-06May-06Feb-06

David Clark returned 30.55% with his ResolutionAsset

Smaller Companies fund

All graphs sourced to Citywire Financial Publishers www.citywire.co.uk (020 7840 2250)