Secret of success for new funds is listening to investors’ gripes

Last summer, when 60, 70 or even 80 fund managers said they planned to launch UK funds, there was widespread scepticism. Now, at the end of Q1 2010, the target date for most of them to close, only a handful have done so. Brockton Capital’s £400m raising for a second opportunity fund is a stand-out success. Aviva Property Investors (backed, but not exclusively, by powerful in-house clients) closed on £250m, while Legal & General has just had a respectable first closing of £175m.

Others have had first closings, but equity is not exactly rolling in. Cordea Savills scraped £70m at last month’s first closing of its UK Income & Growth fund, while Schroders’ Columbus Capital Management managed £80m for its third UK fund. Aegon Asset Management kicked off its healthcare vehicle with £30m. A year ago, F&C REIT confidently set a £400m target, but apparently more like 10% of that sum has been committed so far.

Hopefully these funds will boost their fire power as other investors come in – they will have to, or else they will not have the necessary critical mass to implement their strategies or earn their managers even adequate fees. Judging by the alignment and fee structures of recent launches, such as Legal & General’s UK Property Income Fund, managers have also listened to investors complaints and tried to make improvements. Fund managers that have not yet been successful should take note.

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