Threat to £1bn Henderson mandate

Witan Investment Trust deals blow to float plans for AMP's UK arm with warning it could shift funds
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The Independent Online

Henderson Global Investors, the fund manager owned by AMP that is hoping to list on the Stock Exchange this year, was dealt a crushing blow yesterday when the trust that founded the company said it may move its £1bn of funds elsewhere.

The Witan Investment Trust, which was set up in 1909 to look after the Henderson family fortune and is now a flagship Henderson fund, said it planned to place its assets with other fund managers in search of better returns. Harry Henderson, the chairman of Witan said: "We want better investment performance and it is a sensible decision to consider third-party fund managers.This is bound to be disappointing to Henderson, but no fund manager is the best across all asset classes in all markets all the time. We want to strengthen our armoury to give shareholders a better performance."

Investors in Witan have seen their holdings fall more than 33 per cent in the past three years, compared with a 23.5 per cent fall in the FTSE World index - one of the trust's benchmarks. The trust has been languishing in the third and bottom quartiles of performance league tables.

Mr Henderson said Witan had not paid the fund manager its performance bonuses, which could have been as much as £1.5m, for the past two years because it had failed to meet its targets. Henderson will also lose £4m a year in management fees if Witan decides to move its money.

The break with Henderson is even more significant given their intertwined history. The fund manager was created by the Witan trust in 1934. Witan remained a major shareholder when Henderson floated in 1983, before AMP bought the fund manager in 1998. Lord Faringdon, of the Henderson family, was the chairman of Witan until last year and speaks for a stake worth about £6.5m.

Investment fund brokers championed the move by Witan to put performance first. Mark Dampier, of the broker Hargreaves Lansdown said: "This is good news for Witan shareholders. Its performance has been pretty pedestrian and it is about time that directors of investment trusts considered shareholder value above the old boys network and cosy fund manager relationships."

Witan said it had begun a search to appoint a chief executive for the first time in its history, whose job it would be to find new fund managers for its £1bn portfolio. James Robinson, the current managing director of the trust and an employee of Henderson, will step down when the new chief is appointed. The chief executive will be employed directly by Witan.

The loss of confidence could not come at a worse time for Henderson, as it gears up to lead the group of UK companies that its Australian parent, AMP, is trying to demerge.

"This will be a big blow to Henderson. It is a large chunk of funds to have under threat when there is already so much upheaval in the firm," Mr Dampier said. "I would struggle to recommend any Henderson funds at the moment and if they do not improve their performance, they may lose more funds."

AMP's UK companies, which include Pearl, London Life and NPI, have been a financial drain and caused AMP to post a record loss this year. They are to be renamed HHG, with Henderson fronting the company as an asset manager. HHG will list on the London Stock Exchange in December, and its management is preparing a charm offensive in the City to win investor support.

This is not the first knock-back for Henderson this year. It was rocked by revelations of compliance failings this summer, when a draft internal audit showed serious flaws in Henderson's staff monitoring and control systems that left the company potentially open to breaching client mandates. It was later cleared by a second internal audit.