St James’s Place has blamed significant changes in the alternatives landscape for its decision to close one of its funds.
The firm is expected to wind up its Diversified Assets Fund following a strategic review which concluded it no longer has a place in its investment strategy.
The fund is managed by KKR and is set to be closed by the end of this year.
SJP is expected to meet the legal and administrative costs of the closure and aluminate management fees during the process, while KKR has waived its fees for the remainder of the fund’s life.
It said the move does not reflect a change in SJP’s view of alternatives as an asset class.
CEO for investments at SJP, Justin Onuekwusi, said: “We continue to believe that alternative investments can play a valuable role within certain portfolios and that private capital has an important role to play in supporting UK economic growth.
“However, the alternatives landscape has changed significantly since DAF was
launched.
“Following a review, we concluded that DAF no longer has a long-term role within our investment proposition.
“This decision should not be interpreted as a change in our view of alternatives or our confidence in KKR as the investment adviser.”
SJP’s Assessment of Value report, published last week, highlighted that the fund had underperformed its cash +5 per cent benchmark, despite delivering positive absolute returns.
The £1.5bn fund was launched in 2018 to give clients the chance to invest in assets which were previously only available to institutional investors.
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Today (September 30), Onuekwusi said SJP maintains “active coverage of opportunities” across private markets and other alternatives.
As a result of the review, SJP is applying to the Financial Conduct Authority for approval to close the fund and expects the closure and return of capital to clients to take place this year.
SJP claimed there has been a shift in demand for the strategy, which represented 0.6 per cent of the firm’s overall assets under management.
It said it was taking the “proactive decision” now to protect clients’ interests and to “ensure all clients are treated fairly and consistently throughout the process”.
And the firm added that in recent years there has been “significant innovation” across private market and alternative investing with a broad range of structures now available.
Onuekwusi added: “By acting now, we can provide greater certainty for clients and manage the wind up in an orderly manner, in the best interests of clients.
“Our priority is to make the process as clear, fair and straightforward as possible.
“SJP will absorb the direct legal and administrative costs of closure, reduce the fund charge to zero and ensure clients are supported by their advisers throughout.”
Throughout the wind up process KKR will continue to manage the fund, which will operate in line with its existing investment objectives.
tara.o’connor@ft.com
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