Manager Research

Electus sent out a formal communication today that the shareholders have decided to close the business, effective the 30^th of June 2020. Electus is one of Nedgroup’s “best of breed” managers, responsible for the management of the Nedgroup Investments Growth Fund.

Electus was a boutique within the Old Mutual Investment Group before being spun out as an independent fund management boutique by co-founders Neil Brown and Richard Hasson in 2015. Neil has been the portfolio manager on the Nedgroup Investments Growth fund, through its various iterations, since 2001. Despite Citadel buying a 30% stake in the business in 2018, Electus has been struggling to attract assets outside of the Nedgroup relationship since going independent. The latest drawdown in the equity market has resulted in a material decline in assets under management which has put further strain on the financials.

We have been concerned about their sustainability as a business since going independent in 2015, especially given the concentration of mandates in SA-only equities (long only and hedge) and key client risk in Nedgroup. This has informed our Tier 3 rating on the fund over this time. It is growing increasingly difficult to build an independent fund management business, especially in the difficult economic environment we’ve faced over the last 5 years. We are aware of the added pressure that the recent volatility has placed on fund managers, and this is something that we will be monitoring closely across the industry.

The existing team will continue to manage the Growth fund in the coming months while Nedgroup finalises the fund’s succession. We have retained the rating on the fund until we have more clarity on the future of the mandate.