By Simon Evans

Greg Bennet, manager ofNeptune Investment Manage-ment’s US Opportunities andUK Equity funds, has quit thegroup to join MarlboroughFund Managers (MFM).

Bennet is expected to run anew US Equities fund for theBolton-based firm.

The fund is expected to belaunched in the first quarterof 2006, along with aEuropean offering.

A spokesman forMarlborough told Citywirehe was unable to officiallycomment on the arrival ofBennet.

Bennet, who started life atNeptune as an oils and utilitiesanalyst, has carved himself anenviable reputation asmanager of the Neptune USOpportunities fund.

Under his managementsince August 2004 the £5.3million fund has returned32.6% excluding initialcharges, compared with theaverage North American fundreturn over the same periodof 14.8%.

Since taking overmanagement of the £13.8million UK Equity fund atthe start of April 2005it has returned10.2% against theaverage UK AllCompanies fundreturn over thesame period of7.3%.

In response to thedeparture ofBennet, whois workingout hisnotice at

Neptune until the end of theyear, Neptune managingdirector Robin Geffen is tointroduce a new incentivestructure at the firm.

Under the scheme a third ofthe company’s annual pre-taxprofits will be sharedamongst the investmentmanagement team. Last year

Neptune posted a lossbefore tax of nearly

£600,000.This latest

resignation, followingthat of Barry Norristhis year, means onlyGeffen and RobBurnett, manager of

the group’s Europeanteam, remain

as originalmembers of the firm’s

investment team.

www.citywire.co.uk 17 November 2005

by Patrick Sherwen

Citywire AA-rated fund manager Philip Gibbs hasstepped down as a director of Jupiter to devotemore time to running his funds.

The move means he will play less of a strategicrole in running Jupiter’s business and will nolonger attend board meetings. However, he will stillbe able to offer advice on an informal basis.

Gibbs told Citywire: ‘Any time I can give to myfunds is time I want to have.’ However, as this isgenerally true it begs the question: why now?

The answer is Jupiter hopes to secure asignificant mandate from a new client for him in

the near future and he is making room for this.Gibbs runs nearly £1 billion including £650 millionin the Jupiter Financial Opportunities fund. ‘Moremoney doesn’t necessarily mean more time but Ithink more money generally tends to mean moreclients and that generally means more time,’ Gibbstold Citywire. ‘I think there is something quitespecific that is going to happen fairly shortly interms of a client who wants to give us money.’

It is to be applauded that Gibbs would ratherdevote his time to investment than to running thecompany. However, it seems likely that Jupiter willmiss his undoubted skills at the corporate level.

Gibbs relinquishes director’s role at Jupiter

Syndicate attractsintriguing backers

Acquisitive fund management group

Syndicate Asset Management has

attracted a roster of intriguing new

investors in a share issue to raise

£33 million, writes Patrick Sherwen.

Syndicate has been buying small

fund management businesses and

aims to take over a larger group with

about £4 billion under management.

In October Citywire revealed the

company is a vehicle for Icelandic

investment capital.

Several of those investors,

including investment fund Burdaras

and media magnate Jon Olafsson,

have increased their holdings at 60p

a share. However, money has also

flowed in from new investors such as

banks Islandsbanki, Kaupthing and

the Reykjavik Savings Bank.

UK rival Savoy Investment

Management took a 1.4 million-

share stake in the business. Savoy is

chaired by former Tory leadership

hopeful Ken Clarke and is in the

midst of a shareholder battle over

the performance of the company.

Geneva-based SAAD Investments,

chaired by Saudi businessman Maan

Al-Sanea, and a number of

mysterious vehicles operating out of

offshore centres such as the British

Virgin Islands and Monaco have also

bought shares.

Curiously, Chris Deering, former

chairman and chief executive of

Sony Computer Entertainment

Europe, has bought a small personal

stake of 85,000 shares.

Senior director Jonathan Freeman

said: ‘They agree with our view of

fund management at the moment

that it is full of very good fund

managers who are very unhappy

with the way the sector is organised.’

Beagles’ small-cap exposure called into

question – p3

Workspace approach catches managers

out – p3

Thompson’s discipline put to the test– p4

FrontRunnerFrontRunner

Neptune loses US manager to Marlborough

Geffen: introducing profit share scheme

Winners of theIMA Team Award

for Excellencein InvestmentWriting 2005

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NEWS

Investors question Beagles’ small-cap bets

by Patrick Sherwen

A clutch of top fund managershave been riding the rising shareprice of Workspace Group forthe last couple of years, thoughsome have not made the most ofits jump this week on the back ofnews of a possible bid.

Since hitting a low of 94p in2003 the property investmentcompany’s share price has morethan trebled to hit 312p.

One fund manager tradingthe shares recently wasCitywire A-rated Tim Steer ofNew Star. Steer has been aninvestor since November 2001so after such a sustained rise itis understandable he should betaking profits.

However, his sales earlier thismonth means he will benefitless from any further uplift.Steer sold 500,000 of the853,000 shares held by his NewStar UK Alpha fund, reducingthe fund's stake to 353,000shares or 0.2% of the £523million company.

Another notable fund sellingthis month was A-rated CarlStick’s Rathbone SmallerCompanies fund, which holds250,000 shares.

Also scaling his fund’s holdingback recently was AAA-ratedDan Nickols of Old Mutual.Having bought nearly 2 millionshares in June this year he sold211,000 shares in September to

cut his UK Select SmallerCompanies fund’s holding backto 1.01 million shares.

Moving in the oppositedirection around the same timewas A-rated Ted Scott of F&C. HisStewardship funds were buyingshares in September and betweenthem hold 12.9 million shares.

Workspace has not yet namedthe interested party and said ina statement on Tuesday: ‘Thethird party has confirmed itmay be interested in making anoffer for the Company, but it isat a very early stage in its delib-erations and has not yet formeda view on price and terms. Therecan be no certainty an offer willbe forthcoming.'

Workspace approach catches managers out

www.citywire.co.uk 3 17 November 2005

Performance Highlights

Tycoon becomesRevera directorSoftware tycoon Gordon Crawford

has been made a director at Revera

Asset Management, the boutique

launched by Glen Nimmo and former

dotcom star John Johnston, writes

Dylan Lobo.

Crawford pocketed nearly £80

million in April 2004 after selling his

financial software firm London

Bridge. He is the third biggest

shareholder in Edinburgh-based

Revera behind its founders, although

they own different share classes.

Nimmo said Crawford will play a

key role in the development of new

products. He said: ‘Crawford’s good

counsel will help grow the business

and his strong connections could

open the door to potential clients.’

Nimmo and Johnston, formerly at

US-owned asset management house

Legg Mason, launched the

Chameleon absolute return trust in

October 2004.

Since launch shares in the trust,

which have never traded at a discount,

have advanced by 21.5% to 121.5p.

Revera also runs a unit trust on

behalf of Smith & Williamson and an

offshore fund.

Johnston shot to fame as a

technology fund manager having

done very well from a massive

investment in software firm

Autonomy in the dotcom boom era.

Nimmo believes there are plenty of

attractive opportunities in the sector

once again following its crash.

Chameleon’s biggest holding is

digital electronics company Wolfson

Microelectronics at about 4.3%.

Performance Highlights

by Laurence Fletcher

Concerns have been raised overthe larger-than-expectedweighting in small-cap stocksheld by respected JO Hambrofund manager Clive Beagles.

Beagles, former manager of thegiant £2.5 billion Newton HigherIncome fund, held a AAA ratingfrom Citywire before hisdeparture from the group lastspring to rivals JO HambroCapital Management (JOHCM).

His JO Hambro UK EquityIncome fund, now £155 millionin size, was launched at the endof November 2004. At the timeBeagles, who had virtually noexposure to small-caps atNewton, was aiming tohold roughly 5% of thefund, or about threestocks, in small-caps.

However, the fund’sweighting in small-caps and AIMstocks has beencreeping up

over the past year and nowstands at a punchy 13%. Rivalssuch as George Luckraft, managerof the Framlington EquityIncome fund, have done well outof small-cap positions but someinvestors fear this has changedthe fund’s risk profile.

Tim Cockerill, head of researchat Rowan Capital Managementand an early investor in the fund,told Citywire: ‘We feel it hasdrifted away from its originalstatement. If small-caps go above10% then you’re changing thecharacteristics.

‘We didn’t buy it for small-cap exposure but for mid and

large-caps. It’s somethingthat concerns us andwe’re monitoring it.Performance has also

been a bit lacklustre. Wewouldn’t want to

see the small-cap weighting

get anyhigher.'

A JOHCM spokesman toldCitywire the higher small-capweighting was down to morebottom-up stock opportunitiesarising, for instance motordealership European MotorHoldings and engineer Senior,than originally expected.

‘The small-cap weighting willebb and flow. It may go higher.5% was Clive’s gut feeling at thetime of launch. Some clients areloving it.’

Meera Patel, senior analyst atHargreaves Lansdown, said:‘We’re supporters of the fund.Increasing small-caps increasesthe risk but Clive is a sensible,traditional equity incomemanager.’

Since launch JOHCM UKHigher Income has underper-formed the peer group and themarket, rising 14.4%, comparedwith an average 15.3% gainamong funds in the UK EquityIncome sector and a 17% rise inthe FTSE All-Share index.

NOT A LOT OF PEOPLE KNOW THAT...…Legg Mason European managingdirector Paul Boughton has had sometrouble with the residents of hisSuffolk village. Not neighbour NigelThomas, fund manager at Framlington,or even Investec managing directorDavid Aird, who lives down the road,but in fact Boughton’s very own gaggleof geese. Well ahead of the traditionalChristmas cull, they have had to goafter repeatedly biting off the arms ofhis shirts as they hang out to dry.

Beagles: concerns voiced over small-cap exposure

NEWS ANALYSIS

17 November 2005 4 www.citywire.co.uk

Toby Thompson, manager of the £535 millionNew Star Higher Income fund, has potentiallydone very well from the recent partial flotationof New Star on AIM. However, investors in hismain fund have reason to feelless than impressed so far,even if John Duffield, NewStar’s founder, has publiclybacked the UK EquityIncome specialist.

Over the last 44 months theHigher Income fund hasdelivered a total return of30.93%, ignoring the effectsof initial charges, with gross income reinvestedat the payment date. This compared with asize-weighted sector average of 27.43% and anunweighted average of 32.75%. The fund ranks35th of 68 funds over the period as a whole.The FTSE All-Share index made a total returnof 22.11% and the FTSE 350 Higher Yieldindex made 31.93%. This is a good absolutereturn and OK in relative terms – even if wellbelow the high performance standards NewStar investors have become used to.

However, the fund’s relative performance hasbeen poor recently. Over the year to October2005, the trust ranked 78th of 82 UK EquityIncome funds. It was 59th of 80 in the previous12 months. This is not a result of Thompsontaking a low risk investment approach that hasleft him trailing his peers but delivering solidabsolute returns. The monthly returns onThompson’s fund ranked 11th of 68 in terms ofvolatility over the last 44 months.

Thompson’s old fund, the Newton HigherIncome fund, has beaten his New Starequivalent in each of the last three discrete 12-month periods, as has Citywire A-rated Tony

Thompson’s discipline is put to the testDisgruntled investors’ must hope the riches bestowed upon Toby Thompson by

New Star’s recent flotation will start to rub off on his Higher Income fund.

by David Smithdsmith@citywire.co.uk

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Jupiter Income Trust (MF)FTSE 350 Higher Yield TR (IN)

FTSE All Share TR (IN:IN)New Star Higher Income Ret (MF)

Oct-05Feb-05Feb-04Feb-03Feb-02

Toby Thompson’s New Star Higher Income fund has failed to keep pace with Tony Nutt’s Jupiter Income fund.

Nutt’s Jupiter Income fund, one of the ‘first choice’ income funds for many IFAs.Thompson’s fund cannot, however, be criticised for one of the sector’s often

quoted issues – that, while nominally designed as income-oriented funds themanagers often dispense with the income requirement in the search for higheroverall returns. UK Equity Income funds should aim to deliver a net yield of atleast 110% of the All-Share yield, which is a little more than 3%. Lipper quotesyields for 43 of the 86 funds in the sector and New Star’s fund ranks joint sixthin terms of yield, at about 4%. As many as 15 have a quoted yield below 3.3%and 11 of them below the All-Share's yield.

Thompson puts his underperformance down to two key issues – anunderweight stance on resources, given his yield discipline and their low yields,

which have performed very well recently, andalso a distinct cyclical positioning of his fund.

Thompson said: ‘I have a very disciplinedfocus that I firmly believe works over time,although this has been one of the longestperiods where it hasn’t worked… my view hasbeen, and remains, that the cyclical areas areundervalued.’

Thompson highlights banks, where he has25% of his portfolio invested and where he

feels ‘banks have by-and-large delivered and the worst fears of the market aren’tgoing to be realised’. He feels the worst of investor sentiment has probablypassed and banking stocks with yields of almost 5% on price-earnings ratiosbelow 10 offer great value, although he cannot say when the market will changeits view.

The UK Equity Income sector is incredibly competitive with some highquality funds managed by very experienced, very able fund managers.Thompson’s fund is undoubtedly going through an abnormally bad patch andis likely to recover in relative terms but I would still prefer alternative funds forUK Equity Income exposure.

‘I have a very disciplined focus that I

firmly believe works over time,

although this has been one of the

longest periods where it hasn’t worked.’

Toby Thompson

http://www.citywire.co.uk/redirector/REDIRECT_courier_aegon/http/www.abetterway.co.uk/