The unexpected departure of Nick Clay from BNY Mellon Investment Management last week left a big gap in the asset manager’s global equity income offering and has put the spotlight on new manager Ilga Haubelt.
Veteran manager Clay had been at the asset management group for 20 years joining Newton Investment Management in 2000 and has overseen the £5.2bn BNY Mellon Global Income fund since December 2015.
He announced that he would leave the firm last week along with Andrew MacKirdy and two analysts and it was announced yesterday that they would be joining boutique RWC Partners to lead a new global equity income team.
Under Clay, the BNY Mellon Global Income fund made a total return of 46.57 per cent to-date slightly underperforming the FTSE World benchmark’s 51.72 per cent but significantly outperforming the IA Global Equity Income peer group’s gain of 30.16 per cent, despite the recent sell-offs.
Performance of fund vs sector & benchmark under Clay
Source: FE Analytics
The team’s departure resulted in swift action by fund pickers, with both FundCalibre and Square Mile Investment Consulting and Research stripping the fund of its top ratings.
Juliet Schooling Latter, research director of FundCalibre, said the loss of a team was a blow for BNY Mellon, particularly as Clay had been with them for two decades.
The FundCalibre research head said while new manager Haubelt has experience of managing funds and a similar investment style “it could be a bit of an uphill struggle”.
“It’s hard enough dealing with possible outflows, without having to dealing with an unprecedented market environment at the same time,” she explained.
Haubelt joined Newton Investment Management as head of equity opportunities towards the end of last year from Deka Investment where she was head of global equities.
But with the departure of several key members of the team behind BNY Mellon Global Income, do fund pickers think investors should stick by Haubelt?
Schooling Latter said no investor should rush to make any decisions when it comes to switching from the fund, particularly in this intense market environment.
Rather they should to leave some time for Haubelt to settle in before making a decision.
Andy Merricks, head of investments at wealth manager Skerritts, said he never recommends selling out of a fund following the departure of a manager, calling it a “knee-jerk reaction”.
“A lot of ‘star’ fund managers have had luck and circumstance in their favour and like all good investors know when it’s time to sell, capitalise on a reputation, and move on,” he said. “Investors should always take a time to consider their options.
“To be honest, any fund in any equity income sector is in a best-looking horse in the glue factory competition, at the moment. Dividends everywhere are going to be slashed.”
And the decision by several platforms to remove the BNY Mellon Global Income fund’s rating may also prove to be short-sighted, said Merricks.
“A lot of people have got to find something to do at the moment and justify their worth,” he said.
“I’m not sure many investors will be paying too much attention at present. This really is a ‘when the tide goes out’ moment so existing ratings could be seen to be woefully inaccurate when the dust has settled.”
Performance of IA Global Equity Income sector vs MSCI World YTD
Source: FE Analytics
Whilst the announcement of the BNY Mellon team leaving is sudden this isn’t the first time that it has had a key manager walk away.
Ryan Hughes, head of active portfolios at AJ Bell, said: “It feels as if BNY has a problem in retaining its top talent as this is the latest in a series of departures over the years with the manager of the UK Opportunities fund announcing his departure only a couple of weeks ago.”
Haubelt has also been appointed as a co-manager on that fund. But AJ Bell’s Ryan Hughes warned that while BNY Mellon’s team approach will provide some comfort to investors in the BNY Mellon Global Income fund she may be unknown to many.
Hughes added that the departure of Clay, co-manager MacKirdy and analysts Robert Canepa-Anson and Colin Rutter might leave “a very large hole” at BNY Mellon.
“Clay had been associated with the fund for many years, firstly as a deputy manager and then as the lead for the past five years and therefore his departure sees a huge amount of experience walk out of the door,” he said.
BNY Mellon Global Income has a yield of 3.65 per cent and an ongoing charges figure (OCF) of 0.8 per cent.