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John Wood exit sparks £700m JO Hambro Capital fund outflow

The retirement of star fund manager John Wood in 2017 has been a major factor behind JO Hambro Capital's first annual outflow in 10 years.

John Wood exit sparks £700m JO Hambro Capital fund outflow

JO Hambro Capital Management (JOHCM) reported net annual outflows for the first time in a decade after £700 million exited its UK Opportunities fund following the retirement of Citywire + rated John Wood in 2017.

The fund, which managed £1.8 billion at the time his retirement was announced two years ago, has since shrunk to £454 million.

In its results for the year to 30 September 2018, the asset manager reported £1.1 billion of net outflows, the first time it has reported redemptions since 2008.

Wood's (pictured above) reputation was burnished in the Credit Crunch, when an early move to a defensive posture protected his clients from heavy losses and pushed him into a commanding position in the league tables.

The outflows have come despite a strong showing from Wood's replacement, Rachel Reutter and Michael Ulrich, who have returned 5.8% in the 12 months to the end of February versus a -1.1% average in the peer group. 

Interim chief executive Emilio Gonzalez said that despite succession planning and a 'well-orchestrated' effort to reassure clients, his departure 'led to sizeable redemptions from the strategy’s Oeic sub-funds and the loss of a £700 million segregated mandate,’ nearly half of the fund's assets. 

The Global Select, European Select Values and Asia ex Japan funds also experienced ‘material redemptions’.

Strong sales of its International Select and UK Dynamic funds helped to hedge some of the outflows elsewhere however, while performance helped total assets rise marginally from £30.4 billion to £31 billion.

Profits for the year jumped 30% from £77.3 million to £99.6 million on a turnover of £228.5 million, due to a 10% increase in investment management fees and a sharp fall in directors’ remuneration.

From a collective £6 million, directors received a substantially reduced pay check of £2 million, as a change in the board for governance reasons led to fewer directors in the financial year of 2018, Gonzalez told Welath Manager. 

'In addition, 2017’s higher director remuneration figure included a significant employee’s national insurance liability after the vesting of an equity retention scheme,' he added.

The highest paid director got a £100,000 pay cut on his former £1 million salary.

The firm is still on the hunt for its next CEO after Ken Lambden (pictured below) unexpectedly exited in August 2018, after less than two years in the job. 

The boss of JOHCM’s Australian parent company Pendal Group subsequently relocated to London from Sidney to cover the post until Lambden's successor is found.

The asset manager remains the subject of an FCA investigation over dealing commission payments worth approximately £5 million for a 10 year period up to January 2016.

According to Pendal Group's annual report 'it is possible that, as part of the investigation, the eligibility of other services may also be assessed.'

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Michael Ulrich
Michael Ulrich Average Total Return:
15.23%
124/165 in Equity - UK (All Companies) (Performance over 3 years)
Rachel Reutter
Rachel Reutter Average Total Return:
15.23%
125/165 in Equity - UK (All Companies) (Performance over 3 years)
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