AXA IM’s St John promises investors continuity as he prepares to take over from Thomas

St John (pictured) takes over the fund at the end of the year from Nigel Thomas, who is retiring in March 2019 after 40 years in asset management, with John King, who joined in 2016 from Jefferies, becoming deputy manager.

The incoming lead manager was keen to stress the focus on continuity on the fund, which has suffered around £1bn in outflows since Thomas’s retirement was announced in April. As part of this push, he will hold meetings with Thomas on a quarterly basis to “bounce off ideas”.

At the same time, the former lead manager will continue to hold 70% of his own SIPP in the fund under St John’s tenure, making him the largest private individual holder and emphasising his trust in the new leadership.

“I am very excited to be taking over this fund. My philosophy is very similar to Nigel’s, which is why he selected me to be the number two on the fund in 2013,” said St John. 

“I do not want December to be an event, we had the event back when Nigel’s retirement was announced. I will meet him on a quarterly basis [anyway], but having him away from the detail will be useful and instructive for me.”

He added the investment process and philosophy will remain very similar, as he will continue to invest in growth stocks with a bias towards small and mid-cap companies.

Brexit impact

Like the majority of UK equity managers, St John bemoaned asset allocators’ decisions to move away from UK stocks to other more global markets.

When the UK voted to leave the European Union in 2016, the fund suffered due to its high weighting in mid caps, and St John warned things would “not be pretty” in the event of a no-deal Brexit. 

On 25 November, the EU-27 voted to pass the Brexit agreement, but it remains to be seen whether Prime Minister Theresa May can get the deal through Parliament.

“It will not be very pretty if there is no-deal, but it will come as less of a shock than the original vote,” St John said.

“Everyone hates the UK. Since the Brexit vote, there has been a one way bet with investors redeeming out of UK assets.”

‘The UK will be OK’: Managers say ‘unloved’ market can defy ‘gloomy forecasts’

The manager said the major sell-off of UK assets had created a number of attractive opportunities, especially in companies that are exposed to the UK economy.

Yet he added it was difficult to predict which way these stocks would go in the coming months: “Who knows what happens over the next three to six months. Experience has taught me things can go from cheap to very cheap, so it is impossible to know where the bottom is.”

According to FE, the fund has returned 9.5% over the past three years versus 18.2% for the IA UK All Companies sector, as at 26 November.

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