The Standard Life Global Absolute Return Strategy (GARS), once the largest fund in the UK market, has halved in size since the start of 2019 as a result of clients withdrawing their cash, according to data from Morningstar.
The data shows the fund, which was £20.7bn in size in February 2018, now has assets of just over £6bn after losing a further £6bn this year to date.
Investors pulled £423m from the fund in October alone.
In performance terms, the fund had a torrid 2018, losing 6 per cent, while this year it has returned 5 per cent so far, compared with a gain of 3 per cent for the average fund in the sector.
Over the past three years, the fund has returned 3 per cent, underperforming the sector, and over five years, the fund has returned 2 per cent, compared with a return of 5 per cent for the sector.
Darius McDermott, managing director at Chelsea Financial Services, said the performance of Gars in recent years has been “unacceptable.”
Aberdeen Standard Investments acted to address the poor performance earlier this year, when Aymeric Forest was appointed to replace Guy Stern as lead fund manager in February 2019.
The Standard Life Global Absolute Return fund was once the largest retail fund in the UK, but was hit by a spate of staff departures in 2013 when David Millar, one of the original architects of the Gars strategy, quit to join Invesco and Euan Munro joined Aviva Investors, of which he is now chief executive.
The Invesco Global Targeted Return fund, which Mr Miller now jointly runs, has assets of £10bn, and so has overtaken the Gars fund in size.
But the Inveso fund has also suffered from investor sentiment shifting against absolute return funds.
It was one of the two largest contributors to the £962m outflows suffered by the company’s funds in October, with the Invesco Global Targeted Return fund losing 20 per cent of its assets this year to date.
The Invesco fund has underperformed against Gars over the past three and five years.
The Morningstar data showed investors have withdrawn £15bn from Absolute Return funds over the past year to the end of October.
Standard Life Investments did not respond to requests for comment.
david.thorpe@ft.com
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