Fund firm Momentum is buying Seneca Investment Managers, which runs the Seneca Global Income & Growth investment trust.
Fund group Momentum has struck a deal to buy Seneca Investment Managers, which runs the Seneca Global Income & Growth (SIGT ) investment trust.
Buyer Momentum Global Investment Management (MGIM) is the UK subsidiary of listed South African financial services group Momentum Metropolitan Holdings (MTMJ.J) and runs a range of seven model portfolios and three small funds in its ‘Focus’ range.
The £11m Momentum Focus 3 , £15m Focus 4 and £19m Focus 5 funds are named according to the annual return in excess of UK inflation which they target and invest in third-party funds, while buying some bonds directly.
Seneca deploys a similar multi-asset approach with a focus on ‘value’ investing, backing out-of-favour shares and sectors.
The deal, which is subject to regulatory approval, will see MGIM and Seneca continue to operate at their existing bases in London and Liverpool.
Seneca’s chief executive David Thomas said the deal ‘win-win transaction’, helping Momentum to develop its UK retail business while, as part of the combined entity, Seneca would gain the support of a financially powerful and quoted parent.
‘We believe it will enable us to springboard our combined growth in the UK. Between us, we have a very broad range of multi-asset investment strategies which we will assemble into a single proposition over time,’ said Thomas.
‘The day to day running will be unchanged but our investment team will be part of a broader business with a lot more resource to support and underpin them,’ he said.
‘Particularly around areas like asset allocation both teams have got very similar approaches in terms of judging where and how markets are undervalued and where to emphasise overweights in client portfolios.’
He emphasised that with model portfolios, funds and investment trusts, the merged firm could provide financial advisers and private investors in the UK with a broad suite of options.
Seneca’s slant towards smaller firms and out-of-favour ‘value’ companies, especially in the UK, has hurt performance this year, as those areas have been hit hard during the pandemic, continuing a difficult period for the firm’s style.
Over the three years to the end of September, shares in the Global Income & growth trust are down 9.7%. That is slightly worse than the FTSE All-Share’s 9.3% loss and significantly behind its benchmark, the consumer price index plus 6% per annum, which amounts to 23.2%.