Originally posted by Mordac
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I don't pay for the pink* so I have to assume that either they are slagging him off because he's a Brexit supporter, or his fund performance record isn't quite as good as some.
*And I'd like to think no-one pays for the pink, but some have no choice...
*And I'd like to think no-one pays for the pink, but some have no choice...
TL;DR The fund consistently under performed until he got elected as an MP and stood down from day to day involvement. Since then it has flourished.
As a darling of Britain’s Conservative party, Jacob Rees-Mogg’s stock is sky-high. But in his previous career as a fund manager, his returns were less than stellar.
From 2003 to 2007, the 48-year-old MP and champion of Brexit was in charge of the Lloyd George Emerging Markets Fund, riding the commodities boom and a bull-run in Asian markets.
Mr Rees-Mogg said that under his management, the fund saw assets under management grow from “a mere $50m to $5bn”.
But a review of its performance over the period, using data from Thomson Reuters Lipper, shows that the fund trailed the MSCI Emerging Market Index, the benchmark for many emerging markets funds, in four of those five years. In 2006, for example, the Lloyd George Emerging Markets Fund rose 12.19 per cent, compared with 16.39 per cent growth for the MSCI index.
Mr Rees-Mogg joined Lloyd George Investment, run by Robert Lloyd George, the great-grandson of the Liberal prime minister, in Hong Kong in 1993. Three years later he moved back to London, from where he started to manage some of the firm’s emerging markets funds in 1998. He also had his eye on a parliamentary career, first running for a seat in Fife in 1997.
According to reports at the time, the LG Emerging Markets Fund held just 40 stocks and his colleagues described Mr Rees-Mogg as defensive and focused on value. He was “a conservative, careful investor”, said Samir Mehta, a former colleague from his Hong Kong days, and now at JO Hambro Capital Management.
But Damian Barry, at Seven Investment Management, who has analysed funds including those of Lloyd George for two decades, said the consistent underperformance “suggests some poor stock selection”.
A report issued by Lloyd George for the year ended August 2006 showed that the fund was most heavily invested in South Korea, Taiwan and Mexico, with its biggest individual holdings a 3.65 per cent in Walmart de Mexico, the listed Mexican arm of the US retailer, and 3.64 per cent in Banorte, the Mexican bank. Over the course of 2006, the share price of Walmart de Mexico halved and has never regained the peak it saw at the start of that year.
The report said 2006 had seen a correction in the markets and Lloyd George had adopted a cautious outlook in advance. “Owing to the changing liquidity circumstances and our cautious outlook the critical step of ceasing to market the fund to new investors was taken well before the correction in May,” the note said. It added: “In the event of the correction the fund lost ground because we were not aggressive enough in our repositioning.”
Mr Rees-Mogg, a son of the former editor of the Times, became interested in the markets at a young age, and a report from the Financial Times in 1983 notes how, as a 12-year-old, he attended the annual general meeting of the industrial conglomerate GEC and castigated the board. “What is the point of such a pathetic dividend when you have made a pre-tax profit of £476m and have total reserves of £1.4bn,” he asked.
He was interviewed by several newspapers and photographed at his desk, reading the FT, with teddy bears resting on a chair nearby.
After studying at Oxford he joined J Rothschild in 1991 and worked for the fund manager Nils Taube. He moved to Hong Kong two years later. In an interview with the Express on Sunday newspaper in 2001, he said he is “generally quite cautious so I am investing in companies with strong balance sheets and high dividend yields.
“Valuations in the Nasdaq are still crazy and we still haven’t worked through last year’s boom. You really want to be looking at fairly stodgy, cautious companies in the emerging markets.”
In 2007, Mr Rees-Mogg and a group of his colleagues left Lloyd George and moved to London, setting up Somerset Capital Management, initially under the wing of Odey Asset Management, the hedge fund run by Crispin Odey.
“Ed [Robertson] and I were approaching 40 and it seemed the right time,” said Mr Rees-Mogg, referring to another of Somerset’s founding partners.
In 2010, when he was elected as MP for North East Somerset, Mr Rees-Mogg stepped down as chief executive of the new company, handing over to Dominic Johnson, the former marketing man at Lloyd George.
In his absence, Somerset has blossomed. Mr Rees-Mogg credits his colleagues with all the success. Led by Mr Robertson, Somerset’s portfolios outran peers, and assets under management quickly swelled into the billions.
Today the firm says it has $8.9bn under management and 18 investment managers spread across London and Singapore. Mr Rees-Mogg is not listed as part of its team on its website, either as a manager or an investment manager. Its global emerging markets fund, managed by Mr Robertson, has just under $4bn under management.
Somerset’s partners shared more than £21m in distributions in the year to March and Mr Rees-Mogg still receives an average of £11,730 a month in his capacity as a partner, which together with his MP’s salary gives him an income of at least £216,000 a year. Mr Johnson said Mr Rees-Mogg is gradually giving his shares back to Somerset, but will retain an undecided amount.
Mr Johnson said Lloyd George had been a “rather wonderful firm” and “highly successful” when he was there with Mr Rees-Mogg. “It was a bull market in those days though — and I haven’t seen one of those for years in EMs.”
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