- Somerset Capital Management is looking for new homes for its funds and staff
- SJP reportedly withdrew $2.5 billion over concerns about poor performance
Somerset Capital Management is set to close after the emerging markets-focused fund house suffered a large outflow from major investors.
The group, which was co-founded by former minister Jacob Rees-Mogg and current Secretary of State for the Department for Business and Trade Dominic Johnson, said on Thursday it was in “advanced discussions” to transfer its best-performing funds to another company. .
Somerset, which had $10 billion in assets under management at its peak in 2018, reportedly lost more than two-thirds of its assets after its biggest client, St James's Place, withdrew its investment.
Base: Somerset Capital Management's Westminster office
The redemption reduced Somerset's assets from $3.5 billion at the end of October to about $1 billion.
The group hopes to find a new home for its UK funds, including the Somerset Asia Income and Somerset Emerging Market Dividend Growth funds, as well as their core investment teams.
However, Somerset insists that a new investment adviser would 'retain the existing fund and third party infrastructure'.
According to the Financial Times, SJP's decision to withdraw its investment was partly due to poor performance.
According to Trustnet data, the Somerset Asia Income fund has returned 3.2, 2.4 and 28.5 percent to investors in one, three and five years respectively.
The Investment Association's Asia-Pacific ex-Japan sector peers have fallen 5.3 and 8.6 percent in one and three years respectively, but have added 22.4 percent in five years.
The Somerset Emerging Market Dividend Growth fund is up 1.9 percent over the past year, but has lost 10.8 and 0.4 percent in three and five years respectively.
IA Global Emerging Market peers have lost an average of 10.1 percent in three years, but gained 14 percent in five years.
Rees-Mogg launched Somerset CM together with former colleagues from Lloyd George Management
Johnson, Rees-Mogg and Edward Robertson started Somerset Capital Management in 2007 after working together at Lloyd George Management.
Rees-Mogg, who served in the role of CEO, no longer works for the firm but continued to receive income as a partner.
About four years ago, Somerset rejected a takeover approach from British fund manager Artemis Investment Management, which has £22.9 billion in assets under management.
Oliver Crawley, partner at Somerset, said: “It has been a privilege to manage capital for leading institutions and clients for more than 16 years. I am incredibly proud of everything we have achieved in that time through the hard work and skills of our dedicated team.
“The current teams have delivered strong performances for their investors and continue to do so. We hope that a transition can be achieved that we believe will give the funds a bright future.'