Latest news with #Rathbones
Daily Mail
4 days ago
- Business
- Daily Mail
Income investors back cheap passive funds to save on fees - but are they missing out on returns?
Investors are increasingly shifting their holdings towards passive funds as low fees continue to drive inflows. Active UK fixed income funds across all sectors saw outflows of £15.87billion between January 2022 and the end of March 2025, while inflows into passive fixed income holdings saw inflows of £14.29billion, according to data from Rathbones. More recently, active fixed income funds saw outflows of £1.99billion in the first quarter of 2025, while passive funds again saw inflows of £878.33million. Choosing passive funds means investors will be saving money on their management fees, with passive fund fees generally significantly cheaper than active counterparts. However, it may also mean that they are sacrificing returns over the long term. Darius McDermott, managing director at Fundcalibre, said: 'Many "cautious" passive strategies ended up losing investors more than half their capital. 'Even when long-duration Government bond yields turned negative for a period of time, these strategies kept buying, simply because the index told them to. 'Everyone knew it was irrational. It shows why active is still very important.' Which passive funds are outperforming? Despite outflows, gross sales for active funds in the first quarter – that is, how much money they generated over the period – were £9.95billion, compared with £5.78billion for passive funds during the same period. Bryn Jones, head of fixed income at Rathbones Group, said: 'Assets under management in passive fixed income funds have held up despite there being significant underperformance in general and the significant difference in flows recently is really striking. He added: 'Too many clients are focusing on price when they select fixed income funds, with the result that they opt for underperformance while not fully understanding the option they are taking.' Rathbones says its Rathbone Ethical Bond Fund (ongoing charge: 0.66%) outperformed well-known passive funds in the IA Sterling Corporate Bonds sector by more than ten per cent over the past five years. Over the past ten years, the fund's growth was a third higher than bonds in popular passive funds. Even then, the Rathbones fixed income fund in question delivered a six per cent return over the past five years according to Trustnet data. Meanwhile, the M&G Short Dated Corporate Credit Bond fund (ongoing charge: 0.25%) returned 17.9 per cent, while the AXA Sterling Credit Short Duration Bond fund (ongoing charge: 0.408%) returned 13.9 per cent over the same period. Where does active pay off? McDermott says fixed income markets have had a rocky few years. He told This is Money: ' Inflation shocks, aggressive rate hikes and shifting central bank rhetoric have all made it a challenging environment for backward-looking passive bond strategies to keep up. 'In contrast, active managers have been able to adapt their positioning, taking advantage of opportunities and managing risk more effectively.' To benefit from an active approach, McDermott tips GAM Star Credit Opportunities (ongoing charge: 1.55%) and Liontrust Monthly Income Bond (ongoing charge: 1.03%) for their experienced managers. GAM, he says, 'leans into subordinated financial debt where yields are attractive, while Liontrust takes a macro-driven, defensive approach that has helped it protect capital during volatility.' McDermott also tips Nomura Global Dynamic Bond fund (ongoing charge: 0.7472%). He said: 'As a strategic bond fund, it has the freedom to move across the entire fixed income spectrum, and the manager has consistently delivered in terms of both income and capital return across different market conditions.' Leah Bramwell, investing expert at Canaccord Wealth, also tips two strategic bond funds, Jupiter Strategic Bond fund (ongoing charge 0.71076%) and Aegon Strategic Bond fund (ongoing charge 0.5844%). Bramwell said: 'In fixed income, active management can add significant value over passive options in some areas. 'By design, fixed income indices allocate higher weightings to the largest bond issues/issuers. Whilst this makes sense in the context of equities – investors are allocating to the companies with the largest market caps – it is less appealing when considering debt. 'In an ideal world, an investor would prefer to have higher exposure to companies with lower debt loads, as this should imply stronger balance sheets and less likelihood of default.' Bramwell tips Man GLG Sterling Corporate Bond (ongoing charge: 0.6185%), the manager of which she says 'employs a bottom-up approach with equity-like analysis on his positions. She adds: 'In all cases, investors should be clear on what risks they are taking around credit and duration, and how much they are being compensated for those risks through a higher return.' IA Sterling Corporate Bond fund performances Fund Name Yield (%) 1Y (%) 3Y (%) 5Y (%) M&G Short Dated Corporate Bond I GBP 4.54 6.5 16.1 17.9 AXA Sterling Credit Short Duration Bond Z Gr Acc 4.51 6 12.9 13.9 BlackRock Sterling Short Duration Credit D Acc 4.1 6.8 12.2 12.8 Fidelity Short Dated Corporate Bond W Acc 4.33 5.9 11.9 12.8 WS Canlife Short Duration Corporate Bond C Acc GBP 0 5.9 12.7 12.7 Royal London Inv Grade Short Dated Credit Z Inc 4.9 6.8 12.8 11.9 L&G Active Short Dated Sterling Corp Bond I Acc 4.2 5.9 10.7 11.7 abrdn Short Dated Corp Bond Institutional Acc 5.06 6.4 12.4 10.9 Schroder Sterling Corporate Bond Z Acc 5.72 6.7 7.3 10.9 iShares Corp Bond 0-5yr UCITS ETF GBP 0 5.9 11.8 10.9 CT Sterling Short Dated Corporate Bond Ini GBP 4.54 5.8 12.2 10.7 IFSL Church House Inv Grade Fixed Interest Inc 4.66 5.3 11 10.5 L&G Short Dated Sterling Corp Bond Index I Acc 4.5 6.2 11.8 10.4 Royal London Corporate Bond M Acc 5.18 6.7 10.8 9.9 Artemis Corporate Bond I Acc GBP 5.37 5.3 8.3 8 Royal London Sterling Credit M Acc 5.09 7 10.2 7.9 Vanguard UK Short-Term Inv Grade Bond Index Acc GBP 4.11 6.3 10.2 7.6 M&G Strategic Corporate Bond I Acc GBP 4.47 4.1 8.6 7.4 EdenTree Short Dated Bond B 3.24 5.1 9 7.1 abrdn Short Dated Sterling Corp Bond Tracker B Acc 4.53 5.9 9.4 6.9 Liontrust Sustainable Future Monthly Income Bond B Gr Inc 5.78 4.8 6.3 6.3 Rathbone Ethical Bond Fund I Acc GBP 5.1 5.3 8.6 6 SVS Sanlam Fixed Interest B Inc 4.43 7.1 9.4 5.5 BNY Mellon Global Credit W Hedged Acc GBP 3.39 6.2 11.1 5.5 Rathbone High Quality Bond Fund I Acc GBP 4.2 5.5 9.6 5.4 Premier Miton Corporate Bond Monthly Income C Inc GBP 5.2 6.3 9 5.3 Invesco Corporate Bond (UK) Z Acc 4.38 4.2 8.3 5.2 BlackRock Corporate Bond 1 to 10 Year D 4.54 6 8.9 5.1 Source: Trustnet Are equity investors also too keen on passive funds? The US has dominated global equity markets in recent years, with the S&P 500 delivering healthy returns in recent years. As a result, many retail investors have shifted their holdings towards cheaper passive funds from active alternatives. In 2024, passive funds recorded $1.4trillion of inflows, compared to $1.2trillion of inflows for active funds. Bramwell warns: 'It has been a challenging environment for active managers over the last decade. 'An increasingly concentrated US, and therefore global, equity market, combined with growing levels of passive ownership, have coincided with a sustained period of underperformance for active management. However, she added: 'Active investing shows its worth particularly in inefficient markets. These are markets that are perhaps less liquid, less deep, featuring less or little analyst coverage, or in economies exposed to pressures that distort the market – such as the chronic net outflows seen in the UK causing a mispricing of assets.' Bramwell tips Fidelity Special Situations fund (ongoing charge: 0.92%), SPARX Japan (ongoing charge: 1.03%) and Pacific North of South (ongoing charge: 0.83%). Bramwell also tipped Polar Capital Global Insurance (ongoing charge: 0.8366%) for its 'consistently strong performance, and said specialist infrastructure funds such as FTF Clearbridge Global Infrastructure (ongoing charge: 0.8187%), and Lazard Global Listed Infrastructure (ongoing charge: 0.91%), have 'protected well on the downside versus passive benchmarks.' 'For more efficient markets, like the large cap US space, the data shows a clear inability of active managers to 'earn their fee' and consistently outperform their benchmark indices,' Bramwell added.
Business News Wales
16-05-2025
- Business
- Business News Wales
UK Farmers 'Have Two-Thirds of their Wealth Tied up in their Farm'
On average UK farmers have two-thirds (66%) of their total wealth tied up in their land, equipment and livestock, new analysis from Rathbones, one of the UK's leading wealth management firms, reveals. For almost a third of farmers (30%) interviewed this rises to over three-quarters of their wealth. The vast majority of farmers see their farm not only as their livelihood, but as their future pension which will provide the bulk of their income when they retire, meaning many will face a significant financial shock in a year's time, when new inheritance tax rules come into effect in April 2026, Rathbones said. Rathbones study reveals nearly all of the farmers interviewed (96%) see their farm as their future pension and over half (52%) believe that they will rely on their farm to finance up to half of their cost-of-living expenditure once they retire. Around a third (32%) say it will provide between half and three-quarters of their retirement income and 16% believe they will be almost wholly reliant on their farm which will fund 75% or more of their living costs once retired. At the moment farmers are almost entirely exempt from inheritance tax, as they can use a combination of Agricultural Property Relief and Business Property Relief to pass on their farmland and other business assets to children or grandchildren tax free. But this is set to change in April 2026, with single farm owners only able to pass on up to £1.5 million of farmland and assets tax free, and those who jointly own a farm only able to pass on up to £3 million tax free. This increase in inheritance tax is a significant worry for farmers, as the Rathbones study reveals that 92% of those interviewed expect the next generation in their family to take over the farm and run it, once the current generation is ready to retire. More than nine in ten (93%) of those interviewed said that they think the next generation will be capable of successfully running the farm – but profit margins for many farms are already very tight and 30% of farms are already loss making. Profit margins are likely to be further affected if the next generation of farmers are saddled with additional taxes to pay. Adam Brewer, Investment Director with Rathbones Group, said: 'Even prior to the IHT change, many families have been forced to utilise their land differently by moving into higher margin sectors like caravan parks to subsidise their traditional farming operations. 'The latest tax change is likely to accelerate this struggle, threatening the continuing viability of smaller farms in the area.' Rathbones highlights some key changes to Agricultural Property Relief and Business Property Relief potentially impacting farmers from April 2026: Rates of Relief: The full 100% relief continues for the first £1 million of qualifying property, after which only 50% is allowed for the excess value. This means estates may incur significant IHT liabilities compared to the current situation where larger estates could claim full relief. The full 100% relief continues for the first £1 million of qualifying property, after which only 50% is allowed for the excess value. This means estates may incur significant IHT liabilities compared to the current situation where larger estates could claim full relief. Trusts: Both individuals and trusts will each have a separate £1 million allowance for qualifying assets. Trusts created before 30 October 2024 will retain their own allowances, while post-Budget trusts will share a single £1 million allowance. Both individuals and trusts will each have a separate £1 million allowance for qualifying assets. Trusts created before 30 October 2024 will retain their own allowances, while post-Budget trusts will share a single £1 million allowance. Lifetime Transfers: For gifts made after 30 October 2024, the new rules will apply if the donor dies after 6 April 2026. Gifts could potentially reduce IHT liability if the donor survives for seven years, allowing family members to pass on substantial assets tax-free. For gifts made after 30 October 2024, the new rules will apply if the donor dies after 6 April 2026. Gifts could potentially reduce IHT liability if the donor survives for seven years, allowing family members to pass on substantial assets tax-free. Instalment Payments: Estates can opt to pay IHT liabilities in equal annual instalments over 10 years interest-free, which provides some flexibility for affected families.
Reuters
08-05-2025
- Business
- Reuters
UK wealth manager Rathbones seeks cost controls as volatile markets pose risks
May 8 (Reuters) - British wealth manager Rathbones (RAT.L), opens new tab, on Thursday, reported net outflows and a fall in funds under management for the first quarter and said it would control costs to shield its profit from sustained market volatility. WHY IT'S IMPORTANT U.S. President Donald Trump's erratic tariff policies have caused significant volatility in global markets, and companies across sectors are taking steps to protect their business from rising uncertainty. The Reuters Tariff Watch newsletter is your daily guide to the latest global trade and tariff news. Sign up here. QUOTES "Market volatility ... creates opportunities for asset managers, but sustained volatility can also impact revenue and profitability," Rathbones CEO Paul Stockton said in a statement. "We will be looking to manage operational cost levels actively to mitigate these effects on profitability as much as possible," he said, without going into details. CONTEXT The company said wealth management fund valuations and fee income calculations were done at the end of the January-March quarter, which coincided with a moment of particular market weakness. The markets had been on tenterhooks ahead of Trump's "Liberation Day" tariffs, which were announced in early April and, along with other sectoral tariffs since, have caused turmoil in the global markets. BY THE NUMBERS Rathbones reported a 4.7% decline in funds under management and administration to 104.1 billion pounds ($138.3 billion), in the quarter, while total net outflows were 784 million pounds. Lower gross inflows and weak flows into equity, fixed interest and multi-asset funds had some impact, it said. MARKET REACTION "After the tariff-related correction, markets have since recovered, but we remain conscious that macro factors are likely to weigh for some time," Peel Hunt analysts said in a note. ($1 = 0.7528 pounds)
Yahoo
17-04-2025
- Business
- Yahoo
Major shareholder revolt against BP chairman amid climate clash
Outgoing BP chairman Helge Lund received a near 25% vote against his reelection at the UK oil major's annual general meeting in a shareholder revolt. The company's board was dealt a bloody nose from shareholders as it faced conflicting pressures over climate goals during the meeting at its Sunbury-on-Thames hub on Thursday. It follows BP announcing a drastic shift away from investing in renewables in February after some shareholders pushed for a refocus on fossil fuels to boost its profits and share price, which have lagged behind its rivals. But ahead of the AGM, a group of 48 institutional investors criticised the board for not offering a direct vote on the oil major's revised strategy, while environmental groups fiercely criticised the climate row-back. A resolution for Mr Lund's reelection received a provisional 24.3% of opposed votes, which marks a major rebuttal for a FTSE 100 company. Mr Lund, who played a key role in setting BP's green agenda, announced he will step down as the company plots a new course, meaning votes against his reelection were largely seen as a protest. Tarek Bouhouch, from the activist group Follow This, argued a vote against of 10% or more would have a 'sole ESG purpose' and send a 'strong signal'. According to the campaign group, a vote against the chairman likely never breached 10% in the firm's history, or at least in the last decades. 'Double digits is history,' Mr Bouhouch said, claiming BP had never seen an oppose vote hit 10% at an AGM, at least not in the last decade. During the 90-minute meeting, board members and executives discussed the new strategy, with a large sign saying 'A reset bp' on the set above their seats. Mr Lund spoke about recent concerns over energy costs and security and 'more complex' geopolitical and trade tensions, adding that this uncertainty 'has had an impact on BP'. 'The company pursued too much while looking to build new low-carbon businesses,' he said. The chairman sought to assure shareholders that 'lessons have been learned', adding that every board meeting in the last year had been focused on a new strategy. Chief executive Murray Auchincloss told the meeting: 'We were optimistic for a fast transition but that optimism was misplaced.' 'A fundamental reset was needed which is exactly what we've done,' he added, telling investors that the board's 'one simple goal' is to 'grow the long-term value of your investment. 'We recognise the valuation gap between BP and our peers and we intend to close it,' he said. Mr Auchincloss also claimed the energy 'transition remains important for BP' but that the company will be 'disciplined' about how it invests in green technologies going forward. Matt Crossman, from institutional investor Rathbones, asked the board why shareholders had not been offered the vote on the new strategy, citing the fact that a large swathe of shareholders voted in support of their previous net-zero plan in 2022. Mr Lund argued that they have been encouraged by shareholder support for the reset after 'very very comprehensive engagement' in recent weeks. 'The majority of our shareholders are not asking for a vote on climate,' he said. He also argued BP's net-zero ambition by 2050 is 'consistent' with UN climate goals, adding that details were laid out 'very very extensively' in its annual report. Later asked about how US President Donald Trump's tariffs are affecting the business, Mr Murray said: 'Overall, the impact on our business so far is not material.' Amanda Blanc, a senior independent director at BP who is leading the process to find Mr Lund's successor, also revealed that the search is under way and moving at pace. Back in 2020, BP announced some of the most ambitious goals among fossil fuel companies to cut oil and gas production by 40% by 2030 and invest heavily in renewables. However, BP has now said it wants to increase its production to between 2.3 million and 2.5 million barrels of oil per day by 2030. It came after it made about £7.2 billion in profit last year, which was down a third compared to the year before, after oil and gas prices fell from the highs seen in the wake of Russia's invasion of Ukraine. But the move, which contradicts guidance by global energy bodies designed to help limit climate change, has angered some shareholders and environmental groups. According to the International Energy Agency, no new fossil fuel projects are compatible with limiting global warming to 1.5C compared with pre-industrial levels, a goal adopted by most of the international community.
The Independent
17-04-2025
- Business
- The Independent
Major shareholder revolt against BP chairman amid climate clash
Outgoing BP chairman Helge Lund received a near 25% vote against his reelection at the UK oil major's annual general meeting in a shareholder revolt. The company's board was dealt a bloody nose from shareholders as it faced conflicting pressures over climate goals during the meeting at its Sunbury-on-Thames hub on Thursday. It follows BP announcing a drastic shift away from investing in renewables in February after some shareholders pushed for a refocus on fossil fuels to boost its profits and share price, which have lagged behind its rivals. But ahead of the AGM, a group of 48 institutional investors criticised the board for not offering a direct vote on the oil major's revised strategy, while environmental groups fiercely criticised the climate row-back. A resolution for Mr Lund's reelection received a provisional 24.3% of opposed votes, which marks a major rebuttal for a FTSE 100 company. Mr Lund, who played a key role in setting BP's green agenda, announced he will step down as the company plots a new course, meaning votes against his reelection were largely seen as a protest. Tarek Bouhouch, from the activist group Follow This, argued a vote against of 10% or more would have a 'sole ESG purpose' and send a 'strong signal'. According to the campaign group, a vote against the chairman likely never breached 10% in the firm's history, or at least in the last decades. 'Double digits is history,' Mr Bouhouch said, claiming BP had never seen an oppose vote hit 10% at an AGM, at least not in the last decade. During the 90-minute meeting, board members and executives discussed the new strategy, with a large sign saying 'A reset bp' on the set above their seats. Mr Lund spoke about recent concerns over energy costs and security and 'more complex' geopolitical and trade tensions, adding that this uncertainty 'has had an impact on BP'. 'The company pursued too much while looking to build new low-carbon businesses,' he said. The chairman sought to assure shareholders that 'lessons have been learned', adding that every board meeting in the last year had been focused on a new strategy. Chief executive Murray Auchincloss told the meeting: 'We were optimistic for a fast transition but that optimism was misplaced.' 'A fundamental reset was needed which is exactly what we've done,' he added, telling investors that the board's 'one simple goal' is to 'grow the long-term value of your investment. 'We recognise the valuation gap between BP and our peers and we intend to close it,' he said. Mr Auchincloss also claimed the energy 'transition remains important for BP' but that the company will be 'disciplined' about how it invests in green technologies going forward. Matt Crossman, from institutional investor Rathbones, asked the board why shareholders had not been offered the vote on the new strategy, citing the fact that a large swathe of shareholders voted in support of their previous net-zero plan in 2022. Mr Lund argued that they have been encouraged by shareholder support for the reset after 'very very comprehensive engagement' in recent weeks. 'The majority of our shareholders are not asking for a vote on climate,' he said. He also argued BP's net-zero ambition by 2050 is 'consistent' with UN climate goals, adding that details were laid out 'very very extensively' in its annual report. Later asked about how US President Donald Trump's tariffs are affecting the business, Mr Murray said: 'Overall, the impact on our business so far is not material.' Amanda Blanc, a senior independent director at BP who is leading the process to find Mr Lund's successor, also revealed that the search is under way and moving at pace. Back in 2020, BP announced some of the most ambitious goals among fossil fuel companies to cut oil and gas production by 40% by 2030 and invest heavily in renewables. However, BP has now said it wants to increase its production to between 2.3 million and 2.5 million barrels of oil per day by 2030. It came after it made about £7.2 billion in profit last year, which was down a third compared to the year before, after oil and gas prices fell from the highs seen in the wake of Russia's invasion of Ukraine. But the move, which contradicts guidance by global energy bodies designed to help limit climate change, has angered some shareholders and environmental groups. According to the International Energy Agency, no new fossil fuel projects are compatible with limiting global warming to 1.5C compared with pre-industrial levels, a goal adopted by most of the international community.
