TM Sanditon European – removal from the Wealth 50
Kate Marshall | Mon 21 October 2019
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The TM Sanditon European Fund has been removed from the Wealth 50 list of our favourite funds.
This follows the news that Chris Rice will step down as the fund's manager and Sanditon's funds will be transferred to CRUX at the end of November 2019, subject to regulatory approval. At this point Sanditon Asset Management will close down its business.
Why is this happening?
Sanditon was set up and co-founded by Chris Rice in 2013, and he's run the TM Sanditon European Fund since launch in 2014.
The fund has since reached a sufficient size, currently £306m, and the business is profitable. Ideally though, its founders would prefer the business to grow bigger from its current size, but it's struggled to grow assets in recent years.
In light of this, the team at Sanditon feel it's in the best interests of investors to transfer the assets to another group that's been successful and grown to a more sustainable size.
Who are CRUX?
CRUX was set up by Richard Pease in 2014. It's since become a well-established business and offers a range of European and UK funds.
Pease is a seasoned European equities investor. He's managed European funds for almost three decades and over this time he's built one of the most successful track records in the European sector. He's also built a team of portfolio managers and analysts around him, and together they've built plenty of expertise in this part of the market. Overall we view CRUX as a high-quality European investment house.
What does this mean for investors?
The TM Sanditon European Fund will transfer to CRUX and Pease will take over its management. It will remain separate from his other European funds and will be renamed as TM CRUX European Opportunities.
Pease and his team at CRUX use a different investment approach to the one used by Rice. This means we think the fund will eventually look different to the way it's currently invested. Existing investors should consider whether the new managers' approach is right for them and continues to meet their objectives.
The CRUX team looks for companies that do something unique, which makes it harder for other businesses to compete with them. They might sell a product that customers can't buy elsewhere, for example, and this means they often generate recurring revenues that could support future profits.
Rice does something quite different. He uses a business cycle approach and starts by looking at what’s going on in the wider economy. He then aims to identify when the next stage of the business cycle will arrive (such as a recovery or slowdown) and the types of company that are likely to perform best.
In recent years he's tended to focus on undervalued and overlooked areas of the market, with a focus on sectors including telecoms, retail, healthcare, and media. This value style has remained out of favour with investors though, and this has held back the fund's performance.
Rice has a strong long-term track record. His funds have been on the Wealth 50 since launch in October 2003, including the Cazenove European Fund that he managed prior to setting up Sanditon. Over this time he's performed significantly better than the broader European stock market. Please remember past performance isn't a guide to future returns.
Overall, we believe we have a great track record of picking European fund managers. Our selections have on average outperformed both the European market and the average fund in the Europe sector over the long term.
We remain in contact with both Sanditon and CRUX, and will update clients if there are any further changes. In the meantime we feel it's prudent to remove the fund from the Wealth 50. Pease also currently runs another fund on the Wealth 50, and we don't feel both funds are needed on the list. He remains one of our favourite fund managers in this sector.
| Annual percentage growth | |||||
|---|---|---|---|---|---|
| Sep 2014 -
Sep 2015 |
Sep 2015 -
Sep 2016 |
Sep 2016 -
Sep 2017 |
Sep 2017 -
Sep 2018 |
Sep 2018 -
Sep 2019 | |
| TM CRUX European Special Situations | 7.4% | 32.8% | 19.7% | 0.7% | 0.2% |
| TM Sanditon European | 0.8% | 14.2% | 20.9% | -1.8% | 4.6% |
| FTSE World Europe ex UK | -1.2% | 21.1% | 22.7% | 2.0% | 6.4% |
| IA Europe ex UK | 3.6% | 18.6% | 22.1% | 1.8% | 2.0% |
Past performance is not a guide to the future. Source: Lipper IM to 30/09/2019.
This article isn’t personal advice. If you’re not sure of the suitability of an investment for your needs, seek advice.