We’ve long been expecting some form of consolidation among active fund managers: rising price competition means that those who want to last the course are going to need scale. So last week’s news that fund-management group Henderson is buying its ailing competitor Gartmore came as no surprise. It should also be seen as good news for those invested in Gartmore’s funds: since the loss of its star manager, Roger Guy, the future has looked uncertain for the firm and its funds. However, now investors at least know that their money is in reasonable hands: Henderson has a good record as a manager of funds and of mergers. Two years ago it bought out New Star.
Henderson will no doubt want to make changes when Gartmore is brought into the fold. This could mean the manager of your fund could change, or that your fund could be merged with an existing Henderson fund. “Even though they have announced which managers are moving across (from Gartmore to Henderson), there will be a raft of fund mergers in due course. Therefore, making any decisions about whether to remain invested or move your funds elsewhere is probably a tad premature,” says Ben Yearsley of Hargreaves Lansdown. In other words, investors need do nothing for now: “sit tight and wait for the dust to settle”.
• If you are at, or near, retirement age, the last thing you want from your investments is a high level of risk. So, given their names, you might have thought the Aviva Global Balanced Income Fund and its Global Cautious Income Fund would be just the thing for you. If you’d gone to Barclays for advice you may also have found it agreed. Between July 2006 and November 2008, it sold the funds to 12,331 customers, many of whom were seeking low-risk investments. Had the funds performed well we might have heard no more about it (people rarely complain about mis-selling when they make money). Unfortunately for Barclays, they did not; people complained and the Financial Services Authority (FSA) launched an investigation.
The result? The FSA concluded that Barclays neither made sure the funds were suitable for customers nor used staff or brochures to explain the risks properly. It also suggested that Barclays was aware of the mis-selling by June 2008, but didn’t take “appropriate and timely action”. As a result, more than 50% of the sales “required further consideration”. Barclays has already paid out £17m in compensation and been fined £7.7m.
But the FSA estimates up to another £42m may be owed. If you think you were mis-sold the funds and that cash should be used to make good your losses, call 0800-5877 495 for more information.