Clients withdrew about £360mn from the underperforming £2.2bn Janus Henderson Strategic Bond fund in the year before lead fund manager John Pattullo announced his retirement.
That equates to around £30mn a month for each of the past 12 months, or almost £1mn a day. On a year-to-date basis, £229mn has left the fund.
Those figures are sourced from Morningstar Direct for FT Adviser and can be seen in the context of the performance of the fund, it has lost 13 per cent over the past three years, a period in which the average fund in the IA UK Strategic Bond fund sector in the same time period lost 2 per cent.
That makes the fund the absolute worst performer in the IA Strategic Bond sector over that time period.
Ben Yearsley, investment consultant at Fairview, is on the investment committee at fund buyer Tillit, which has removed the fund from its recommended list. He said: “A lot of the high-profile strategic bond fund managers got their duration calls wrong last year.
"I remember meeting John Pattullo early in 2023 and he was convinced a US recession was coming, a lot of people felt that of course, and were wrong. More broadly I would say that while they have a good long-term track record, I have often wondered if their knowledge translated into performance."
He added: "They certainly know what they are talking about, but I often thought performance could have been better in that context. “
Duration is the sensitivity of a bond to changes in interest rates. If an investor believes that rate cuts are likely, then the temptation is to go long duration, whereas if one feels that rate rises are likely, the temptation is to go short duration.
The environment in which rates would likely be cut is one in which a recession is expected, as no recession came in 2023, rates have remained higher than many, including Pattullo expected, meaning that longer-duration bonds underperformed.
Pattullo’s long-serving co-manager on the fund, Jenna Bernard, will now lead the team that manages the fund.
A representative of Janus Henderson said: “ We can confirm that after more than 27 years at Janus Henderson and 31 years in financial services, John Pattullo co-head of global bonds will be retiring from Janus Henderson and the asset management industry at the end of March 2025.
"We thank John for his valued contribution to the firm and wish him well in the future.”
They added: “We have a well-resourced global bonds team who have extensive expertise managing strategic and global bond strategies. The existing team will absorb John’s responsibilities."
Jenna Barnard, currently co-head of global bonds will become head of global bonds following Pattullo's departure and will retain portfolio manager responsibilities on all of the funds that she currently manages with Pattullo's.
The representative added: "Jenna has been with the firm – and has worked alongside John – for the last 20 years, and has over 23 years of financial industry experience. As part of the robust succession planning for our investment teams, Nicholas Ware, a Portfolio Manager on the team since 2012, will become a named Portfolio Manager on all Janus Henderson Strategic Bond Funds and all Janus Henderson Developed World Bond Funds, effective 1 July 2024."
