Stephen Harker, lead manager of the Man GLG Japan CoreAlpha Fund is to step down at the end of March 2021 after four decades in the industry. Senior portfolio manager Neil Edwards will retire at the same time.
Jeff Atherton, who currently serves as senior portfolio manager, will take over as lead manager and continue to be supported by co-manager Adrian Edwards and assistant managers Stephen Harget and Emily Badger. Harker will remain an advisor to the fund for one year, after which he will retire.
The team will continue to implement the same longstanding investment process, which involves buying shares in large Japanese companies they believe are going through a temporary setback. Then they wait patiently for them to recover, with the hope their share prices will rise as they do. When they feel the recovery's complete, or a better opportunity emerges, they'll sell and move on to the next investment. It's a style known as 'value' investing.
The managers tend to invest in relatively few companies. This means each one can make a significant contribution to returns, although it increases risk.
Who is the new manager?
Atherton has more than 30 years' experience in the investment industry. He started his career in 1987 at Sun Life Canada and later moved to Equitable Life, where he was responsible for a Japanese equity portfolio. After that, he was hired to work alongside Harker at TCW London International.
In 2006, Atherton joined Stratton Street where he ran a Japanese hedge fund and achieved a respectable track record. When Harker was recruiting to expand the Japan CoreAlpha team in 2011, Atherton was his first choice, given his experience and understanding of managing investments in Japan. The duo have worked closely together ever since.
We've spoken to Atherton a number of times since he joined the team and have always found him to be a knowledgeable and passionate investor. Our analysis of his previous funds suggests he's stayed true to the value investing philosophy.
How has the fund performed?
The fund has a good long term track record but it's struggled in more recent years. The managers' contrarian investment style has been out of favour, and this dragged on performance. Investors generally preferred to invest in companies that produce products and services people will pay for regardless of what happens in the economy.
All fund managers go through periods where their investment style is out of favour, but many recover and go on to deliver strong performance over the long term. We have been encouraged that the managers remain dedicated to their longstanding investment style, which has proved successful over the long term. That's why we've been happy to retain the fund on the Wealth Shortlist. However, the retirement of two experienced members of the team has dented our conviction.
|Annual percentage growth|
| Sep 15 -
| Sep 16 -
| Sep 17 -
| Sep 18 -
| Sep 19 -
|Man GLG Japan CoreAlpha||27.2%||18.0%||10.9%||-5.6%||-21.4%|
Past performance isn't a guide to the future. Source: Lipper IM 30/09/2020.
What happens next?
It's always disappointing to see experienced managers retire, but we're pleased to hear Harker and Edwards aren't leaving immediately, and the fund will continue to benefit from Harker's knowledge and wisdom for a year after his departure. That said, we're awaiting more information on what Harker's advisory role will look like, and how much time he will be dedicating to the fund during the year.
Atherton is an experienced investor in his own right, and he's worked alongside Harker for a long time, so he knows the investment process well. We're going to build our knowledge of the new manager over the coming months, meet with his wider team and carry out further analysis. We will let investors know if our view on the fund changes.
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