NEDGROUP’S RESPONSE

“The situation with the Nedgroup Investments Managed Fund has, as you have outlined, been frustrating, with disappointing performance realised for investors, including many employees at Nedgroup Investments,” Robin Johnson, head of investments at Nedgroup Investments, says:

He says a number of factors influenced the decision to change from RE:CM to Truffle, but it was “not driven at all through pressure from investors. We certainly had an increasing number of difficult conversations as under-performance worsened, but performance in isolation does not lead us to change our portfolio managers, as we are acutely aware that all good active managers experience periods of under-performance.”

Johnson says Nedgroup has processes in place to monitor its “best of breed” managers and evaluate whether they are managing funds consistently with their stated objectives, investment process and philosophy. These include compliance checks on the portfolio, the evaluation of performance against peers and benchmarks, interrogation of the team’s investment views, and interaction with the investment team.

On the timing of the change of managers, Johnson says: “We spend a lot of time speaking with advisers and clients to coach them about not trying to time investments in asset classes, markets or different funds. Unfortunately, the timing of the change on the Managed Fund has not exhibited the behaviour that we seek to encourage.

“A key investment principle of Nedgroup Investments is to encourage long-term investors, so the decision to change was made after extensive consideration and debate from a number of different perspectives.”

In its communications to investors, Johnson says that, in addition to its fund fact sheets and newsletters, Nedgroup Investments has provided, among other things, a full list of the fund’s quarter-end portfolio holdings, available on its website; ad hoc explanatory client communications; and responses to client requests for information.

It also conducted roadshows that included the portfolio managers, where financial advisers have had the opportunity to interact and ask questions.

“Hence, we are confident that we consistently provided a significant amount of information to ensure investors in the Managed Fund were aware of the objectives and underlying exposure of the portfolio,” Johnson says.