Fund removed from the AJ Bell Favourite funds list

Writer,

We’ve removed Man GLG Japan CoreAlpha

What is the AJ Bell Favourite funds list?

The AJ Bell Favourite funds list is designed to lighten your research load. To narrow the field, we’ve attempted to select a high-quality shortlist of funds which we believe are capable of delivering their objectives over the long term. To make the list, each fund needs to pass a robust selection process.

Why have we removed this fund?

We remove a fund from the Favourite funds list because our opinion has changed, and because we believe other funds are more likely to deliver their stated objectives over time.

We originally selected the Man GLG Japan CoreAlpha fund because of its solid, repeatable investment process. The fund selects its investments from the cheapest stocks in the market, predominately using a price-to-book metric. It then undertakes qualitative analysis to unearth the stocks that work well together collectively as a portfolio. The success of this approach was evidenced over multiple market cycles in the past. But more recently, as value stocks have lagged behind growth stocks, this style has noticeably struggled.

Another strength of the fund, besides its investment process, is the resource and experience of the management team to successfully execute that process. But we feel that this has been weakened by the recent announcement that the team’s two most senior members will both be retiring early next year.

On one hand, succession planning has been considered: the fund won’t usher in new management, as usually happens following fund manager departures. But the double retirement is a notable loss and it remains to be seen if the remainder of the team can be successful without the strong leadership from team head Stephen Harker. Compounding the situation further is the recent retirement of Robert Brooke, a consultant to the team with extensive experience in the Japanese equity market.

All told, while we don’t expect a great level of turnover in the immediate future and we think the fund remains true to its process and philosophy, the loss of experience and resource has led us to the decision to remove it from the Favourite funds list.

In our view, it’s important for the AJ Bell Favourite funds list to be diverse – spanning various sectors and investment styles – to give you plenty of choice. A consequence of this diversity is that it isn’t possible for every fund on the list to perform well at any one time. This is because market conditions which act as tailwinds for some types of funds may be headwinds for others, and vice versa.

We hope you find this update useful. Please remember that it falls to you to monitor and manage your own investments and to make any changes you think are necessary. Keep in mind this is information only, and not a personal recommendation to buy or sell any of the funds referenced above.


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Written by:
Simon Molica

Simon Molica is a fund manager in the active portfolio team at AJ Bell. Before joining AJ Bell, Simon worked for an investment management company in the role of Portfolio Manager, running a variety of investment propositions – including the active range of their Managed Portfolio Service. Prior to this he worked at a global consulting firm and one of the world’s largest banking and financial services organisations. Simon holds a BSc in Mathematics with Management Studies, with honours, from the University of Sussex. He also holds the Investment Management Certificate.