"I’ve now had the opportunity to give some more thought to the developments at Gartmore and to meet some of the Gartmore team who are here presenting at the Autumn Joint Investment Conference in Scotland.
Gartmore has had a tough year – starting with the whole issue with Guillaume Rambourg in which what was presented by the company as to be a relatively minor matter regarding the breaking of an internal dealing rule was given major publicity in the press.
Now we have seen the announcement that Roger Guy is going to retire next year, in addition to the headhunting of CIO Dominic Rossi by Fidelity, and the announcement by their board of a strategic review of the business – an understandable and sensible reaction to what has been a difficult time for the business and for the share price.
On the other side of the coin however is the fact that Gartmore has recruited some high calibre new managers over the past year, such as John Anderson who has taken over their Corporate Bond fund and Leigh Himsworth who is running their UK Alpha fund, and for the majority of the business it is very much ‘business as usual’. The managers I have spoken to seem genuinely happy with their lot and are continuing to focus on doing the best job for the clients. Obviously they could do without the uncertainty surrounding the business and are hoping it will be resolved as soon as possible.
The strategic review could lead to:
Unlike New Star, the company remains profitable and so the first option is quite possible. A forced fire sale seems both unlikely and unnecessary.
As far as the retail business is concerned I do not see this as a time for knee-jerk reactions or to suggest to clients that they should switch out of Gartmore funds.
In fact, we do not actually have any Gartmore funds in our active recommendation list at present. I would not want to introduce any until uncertainty surrounding the future of the business has been resolved.
However I do not think there is a justification for selling based on the corporate situation of the company. I would point in particular to our experience with New Star, which resulted in clients who were in the European fund managed by Richard Pease (which we had recommended for a number of years) continuing to fare well with the same manager under the Henderson brand.
The bulk of our clients’ money with Gartmore is in the European Select fund, which used to be managed by Roger Guy but has now been run by John Bennett since January 2010. We continue to classify this fund as a hold and don’t believe that Roger’s departure will have any significant impact on the way the fund is managed."
If you have any concerns about your own holdings in Gartmore funds, please call Andrew Graham or Mike Burgess on 0800 33 99 99. They will be happy to help.