Interactive investor has removed the Ninety One UK Alpha fund from its ‘Super 60’ best-buy list after veteran stockpicker Simon Brazier announced he is to step down at the end of May.
Brazier has been managing the fund since January 2015 and is set to be replaced by Anna Farmborough and Ben Needham, but they were not enough to keep the fund recommended by the broker.
Dzmitry Lipski, head of funds research at interactive investor, said: “Brazier’s experience and track record were key reasons why the fund was recommended for the Super 60.
“The fund was placed under review upon the announcement of Brazier’s departure in February 2023 and the decision has now been taken to remove the fund.”
However, experts still see worth in the fund and are looking forward to seeing the new managers in action.
Ben Yearsley, director of Fairview Investing Limited, is more positive on the fund now that a new management team is set to take over.
He said that the fund was “frankly disappointing” under Brazier and Yearsley previously called the fund a ‘sell’.
Performance of the fund vs sector and benchmark since manager start
Source: FE Analytics
Ninety One UK Alpha has underperformed both the FTSE All Share index and the IA UK All Companies sector since Brazier took over.
Yearsley added: “With Ben Needham coming on board, my view is changing, largely as I invest in Ben’s other fund, Ninety One UK Equity Income. That doesn’t mean I would buy the fund today as I already own the other, but I wouldn’t necessarily sell this anymore.
“If I was coming to this fund afresh today I would be more positive on it than I have in a while, but I’d favour their equity income funds.”
However, Yearsley said that he would hold Ninety One UK Alpha if he had already invested in the fund.
James Yardley, senior research analyst at FundCalibre, also suggested giving the new managers a chance to prove their worth.
He said: “We think Brazier has built a very strong team at Ninety One and we expect this to be a very smooth transition. Farmborough (co-manager on UK Alpha since 2022) and Needham (income manager since 2019) both followed him from Threadneedle and work very closely together. They all follow the same process.
“We think Brazier leaving will give Needham and Farmborough the chance to stamp their own mark on the Ninety One UK franchise.”
Yardley also said that the fund has been “a little bit mediocre” in recent years with “a number of individual stock errors” in 2021, but he expects the fund to be higher conviction going forward, with fewer stocks and no sector constraints.
He added: “We're excited to see what this team can do and I would give a cautious buy at this stage but I will be closely following the funds going forward. “
Robert Fullerton, senior research analyst at Hawksmoor Investment Management, also mentioned the underperformance of the fund.
He said: “The longer-term record now looks mixed. It had a difficult time through the pandemic and suffered some stock specific issues. We have also sometimes felt that the fund has lacked a defined style.”
Fullerton added that a newer team sometimes has something to prove and Hawksmoor Investment Management wants to see whether the new managers can deliver.
He said: “The fund has had a strong start to 2023, it is not too big to be nimble and we will be giving the new team some time.”
For Tom Sparke, investment manager at GDIM, the fund is also a “hold”.
He said: “Brazier has been a well-trusted name in fund management since his successful time at Threadneedle (now Columbia Threadneedle), so the news of his departure from the UK Alpha fund may naturally raise alarm bells with investors.
“While it is disconcerting to see a manager of his calibre leave, I would expect the fund to continue in a similar vein. I believe that current investors should hold on.”
Sparke suggested that holding this active fund in combination with a passive one would “work well”, owing to Ninety One UK Alpha’s high active share.