Proactive Investors - Jacob Rees-Mogg's Somerset Capital Management will wind down its operations and transfer its funds to a new investment adviser after losing a large fund mandate from St. James’s Place PLC (LON:SJP) last week.
Somerset, which was founded in 2007 by Rees-Mogg and two former fund management colleagues at Lloyd George Management, said today it is in "advanced talks" with its authorised corporate director to transfer funds to a new investment adviser as it closes its wider institutional business.
Its UK funds, including the Somerset Asia Income Fund and Somerset Emerging Market Dividend Growth Fund, along with their investment team, are seeking the move to a new investment adviser while retaining existing fund and third-party infrastructure to "ensure the seamless continuity of these funds and their managers".
Last week St James’s Place, as it faces pressure to cut costs for clients since the introduction of consumer duty in July, removed the £667 million mandate from Somerset to manage the Global Emerging Markets strategy, moving it to Robeco with the result of the annual external manager fee falling to 0.15% from 0.3%.
SJP also removed a £590 million mandate from another investment manager, Paradice, at the same time, with management of Global Smaller Companies being moved to Northern Trust to cut the annual charge to 0.06% from 0.6%.
Both new strategies will managed with what SJP chief investment officer Tom Beal called an "active quantitative" style that the company has described as sitting in between active and passive investing, "using technology to make investment decisions using mathematical modelling rather than human judgements".
These losses led to Somerset’s assets under management shrinking to around US$1 billion (£790,000) from nearer US$3.5 billion in October, according to the FT, down from around US$10 billion at its peak five years ago.