- Somerset Capital Management seeks new homes for its funds and staff
- SJP reportedly pulled out $2.5billion on poor performance concerns
Somerset Capital Management is set to close after the emerging market-focused fund house suffered large outflows from major investors.
The group, which was co-founded by former cabinet minister Jacob Rees-Mogg and current Minister of State in the Department for Business and Trade Dominic Johnson, said on Thursday it was in ‘advanced talks’ to transfer its top performing funds to another business.
Somerset, which had $10billion in assets under management at its 2018 peak, reportedly lost more than two-thirds of its assets after its largest client, St James’s Place, withdrew its investment.
Base: Somerset Capital Management’s office in Westminster
The redemption dragged Somerset assets down from $3.5billion at the end of October to about $1billion.
The group is hoping to find a new home for its UK-based funds, including the Somerset Asia Income and Somerset Emerging Market Dividend Growth funds, as well as their key investment teams.
However, Somerset insists a new investment adviser would ‘retain the existing fund and third-party infrastructure’.
SJP’s decision to withdraw its investment came partly as a result of poor performance, according to the Financial Times.
The Somerset Asia Income fund has returned 3.2, 2.4 and 28.5 per cent to investors over one, three and five years respectively, according to Trustnet data.
Peers in the Investment Association’s Asia Pacific ex-Japan sector are down 5.3 and 8.6 per cent over one and three years, respectively, but have added 22.4 per cent over five years.
The Somerset Emerging Market Dividend Growth fund is up 1.9 per cent over the last year, but has lost 10.8 and 0.4 per cent over three and five years, respectively.
IA Global Emerging Market sector peers have averaged losses of 10.1 per cent over three years, but have gained 14 per cent over five years.
Rees-Mogg set launched Somerset CM alongside former Lloyd George Management colleagues
Johnson, Rees-Mogg and Edward Robertson started Somerset Capital Management in 2007 after working together at Lloyd George Management.
Rees-Mogg, who held the chief executive role, no longer works for the company but continued to procure income as a partner.
Around four years ago Somerset rejected a takeover approach from UK-based fund manager Artemis Investment Management, which has £22.9billion in AUM.
Oliver Crawley, partner at Somerset, said: ‘It has been a privilege to handle capital for world-leading institutions and clients for over 16 years. I am incredibly proud of all we have achieved in that time through the hard work and skill of our dedicated team.
‘The current teams have delivered strong performance for their investors and continue to do so. We hope a transition can be secured which we believe will give the funds a bright future.’
