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Columbia Threadneedle Investments is shutting its standalone UK smaller firms division as traders pull cash forward of a UK Price range that might additional undermine confidence within the ailing sector.
The US fund group, which manages about $672bn globally, is merging the UK small cap staff into its wider European smaller firms unit, which it stated was geared toward utilizing assets “in probably the most environment friendly means”.
The transfer comes amid a broader restructuring and job cuts on the fund supervisor, which additionally confirmed that Catherine Stanley, co-head of UK equities, and fund supervisor Gordon Happell, will go away the agency.
The choice to shut the division comes at a troublesome interval for smaller UK shares as traders pull cash from the sector, which has underperformed the FTSE 250 and blue-chip shares. Intention shares have dropped about 10 per cent for the reason that UK normal election was known as in Could.
Some traders are involved that the Labour authorities will take away inheritance tax reduction on small cap shares listed in London’s junior Intention market and improve capital features tax in Wednesday’s Price range.
Bankers and fund managers have warned that dropping inheritance reduction on Intention shares might trigger a “cliff edge” second for the junior market, forcing extra traders to promote.
Shares held on Intention are typically exempt from inheritance tax, as long as they qualify for enterprise property reduction and are held for longer than two years earlier than the loss of life of their proprietor.
Columbia Threadneedle stated the expanded European small cap equities staff will encompass six funding managers working greater than £5bn in belongings. The fund group closed certainly one of its UK smaller cap funds earlier this yr as dwindling belongings made it too pricey to run.
The pan-European staff will probably be led by Mine Tezgul and contains Phil Dicken, James Thorne, Craig Adey, Quang Le and Ed Bottomley. The corporate’s remaining UK fairness managers will run bigger shares.
As a part of the broader restructure, the corporate will mix its accountable funding analysis staff with the 125-strong international basic analysis division. Columbia Threadneedle stated this could lower prices and make sure that ESG is part of the entire funding course of.
The adjustments have resulted in a handful of job cuts, in line with an individual near the method.
Columbia Threadneedle stated: “Inside equities, we have now invested in and grown our pan-European fairness analysis staff based mostly in London to help our UK, European and international fund managers.”
It added it had additionally introduced plenty of its fixed-income researchers and analysts targeted on excessive yield and rising market debt into the worldwide staff, reflecting “the character of company fixed-income markets”.
Columbia Threadneedle Investments was so-named in 2015 after US fund group Columbia acquired UK funding supervisor Threadneedle Investments.