Fitch Ratings has placed Ignis Absolute Return Government Bond (ARGBF) Fund's ‘strong' Fund Quality Rating “under review". The fund is managed by Ignis Asset Management (Ignis).
The rating action follows the departures of Russ Oxley, who was Head of Ignis' rates team and lead portfolio manager (PM) of the fund, and of co-managers Paul Shanta and Adam Purzitsky. Along with Stuart Thomson, Chief Economist, who remains at Ignis, they formed the core management team of the fund.
Chris Fellingham, Chief Investment Officer of Ignis, will oversee management of the ARGBF strategy and alternative rates capabilities. Stuart Thomson, who was a named PM, remains within the team and will continue in his role as the driver of investment themes.
Two senior PMs from Standard Life Investments (SLI), Jonathan Gibbs (Head of real returns) and Adam Skerry (Director in the real return team) will be closely involved in providing investment input into ARGBF's strategy. PM Ross Crawford, who was the original architect of the team's proprietary research and portfolio management tool, ClearCurve, but moved within the team in 2012 to focus on portfolio management, will now again oversee the use and development of the system.
Fitch expects to resolve the "Under Review" status of the fund within six months. The agency will closely monitor the fund during this period to assess if the staff departures have affected the capacity of the fund to achieve its absolute return objectives and outperform peers. The investment process and risk management resources of the fund remain unchanged.
Fitch will monitor the fund across three key areas: firstly, the quality of the new team in place and its ability to implement the fund's unique investment process; secondly, the stability of the fund in terms of adherence to its core investment and research process; and thirdly, its ability to maintain its long-term performance track record in line with objective (ie positive total return on a rolling 12-month basis), despite deteriorating performance since August 2014.
Sufficient demonstration of the above would likely lead to an affirmation of the "Strong" rating. Conversely, an inability to demonstrate the above could lead Fitch to consider downgrading the fund.
The fund is a UCITS-compliant Luxemburg SICAV and was launched in March 2011. It is an absolute return government bond fund with GBP3.9bn in assets under management (AUM) as of end-September 2014.
Ignis is a UK investment management company, with GBP60bn AUM at end-June 2014. On 1 July 2014, SLI, a global asset manager with GBP192bn AUM at end-June 2014, confirmed its acquisition of Ignis AM.