Rathbones is re-branding the Recovery fund to remove the “ambiguous” term from its name while cutting the annual management charge to attract investment into the fund.
The plans coincide with the fund’s co-manager Jo Rands’ decision to leave the firm to pursue interests outside the investment industry. Co-manager Alexandra Jackson will continue to run the mandate with the support of Rathbones’ research team while a replacement for Rands is recruited.
Launched in 2009, the £62.4m fund has been managed by Rands and Jackson since 2014 and is to be renamed the Rathbone UK Opportunities fund. Mike Webb, chief executive of Rathbone Unit Trust Management, says the term ‘recovery’ is now used too frequently “to be meaningful to investors”, and that the lack of clarity in the name meant the firm was “on the back foot” when marketing the fund.
Webb adds that the changes to the fund are not “a knee-jerk reaction” to Rands’ departure, which was “an entirely separate decision”.
He says: “As part of our ongoing review of our investment proposition and in light of discussions with advisers, it has become apparent that the term ‘recovery investing’ has become increasingly ambiguous, with the definition of ‘recovery’ now applied too widely to be meaningful to investors.
“Fund managers frequently refer to differing characteristics when applying the term ‘recovery’ and their mandates may embody varying investment styles and risk profiles. We have always sought to describe our investment propositions as lucidly as possible, and so have taken the step of renaming the Rathbone Recovery fund to Rathbone UK Opportunities fund. In doing so, we aim to give potential investors a much clearer impression of what they can expect from the fund.”
The name change will not affect the fund’s objective, which focuses on investing in UK companies that the manager has identified as having a catalyst for value creation.
The fund’s AMC for the I-class units is to be reduced from 0.75 per cent to 0.45 per cent while the OCF will decrease from 0.9 per cent to 0.6 per cent as Rathbones wants “to encourage people to look at the fund and take it seriously”.
There will be a planned review of the charges after three years or when the fund’s assets under management reach £250m. If the decision is subsequently made to change the charges, the share class will be closed and a new one launched so that existing investors are not subject to an increase in the AMC.
Both the name change and the fee reduction will take effect on 23 October.
Webb adds: “The fund has just achieved a three-year track record under Jo and Alexandra, and, therefore, we believe it will be compelling to a much wider group of investors. Coupled with these changes, we are lowering the fund’s AMC to 0.45 per cent to encourage greater consideration.
“Alexandra will continue to manage the fund, using the existing investment process, to build upon its track record and ensure continuity for existing unit-holders. We wish Jo all the very best for the future, and thank her for her contribution to the management of the fund.”
Over three years the fund has returned 29.3 per cent against the 28.2 per cent average of the IA UK All Companies sector, FE data shows.