Ethical IFAs say clients will be unimpressed by Henderson SRI team cuts

Move is a “retrograde step” according to advisor.

Some of the UK’s most influential ethical independent financial advisors (IFAs) have expressed disappointment and said clients will be unimpressed with a decision by Henderson Global Investors to ditch its dedicated in-house SRI research and switch its SRI funds to mainstream in-house portfolio managers. The Ethical Investment Association (EIA) which represents financial advisers, has also urged the fund manager to reconsider its decision. Earlier this week, Responsible Investor reported that the six-strong socially responsible investing (SRI) team at Henderson faced redundancy after the manager said it would outsource ESG research to EIRIS, the London-based provider. The move accompanies a shift of its specialist sustainability funds, Global Care Managed, Global Care Growth and Industries of the Future, to be run by the global equity team led by Neil Rogan. Its mainstream UK value and income team under Job Curtis will run the sustainability-themed Global Care UK Income fund. The SRI funds business at Henderson is understood to represent about £750m in assets, split between retail and institutional money. Lee Coates, founder of Ethical Investors, the Cheltenham-based IFA, one of the UK’s oldest ethical investment specialists, said the Henderson move was a “real shock”. He added: “It’s one thing being a good manager but there’s a different thinking in being a good SRI manager. You can get many ethical funds that are just run on a screened basis by a mainstream portfolio manager, but our clients liked much more than that in the Henderson approach, such as the engagement and the sustainability commitment. This is a retrograde step and our clients will, I think, view SRI as asideline now at Henderson. You have to think they might now start merging the funds or something. If performance is good we’ll stick with it, but if the funds start to change that’s different.” Peter Holden, Partner at Holden & Partners, another major ethical IFA, said: “It would seem that Henderson have decided that the SRI team isn’t adding any value. We believe that our clients are not losing by investing in sustainable funds and indeed may be gaining by identifying companies in a growth phase. The full sustainability research is business critical, so this is not a positive decision for us. Henderson will be taking out an element of research and analysis that won’t be available in the mainstream.” The EIA said advisers could look unfavourably on Henderson’s decision when recommending funds to retails clients: “Established advisers in the field will tend towards selecting investments with firms with clearly established ethical investing policies; developed as a result of collaborative work with their own in-house research teams.” Henderson has said SRI fund managers George Latham and Tim Dieppe will continue to manage their funds until the end of the year. Henderson’s SRI research team members Seb Beloe, My-Linh Ngo, Bridget Boulle and Hyewon Kong are also facing redundancy. None of the team could be contacted for comment and they are no longer using Henderson e-mail accounts. A spokeswoman for Henderson said the SRI team was, however, actively “exploring a range of options” with the fund manager with any decision on that expected shortly.