H20 shrugs off conflict of interest concerns
H20, the UK-based asset management arm of Natixis bank, will continue to have a representative on the board of Tennor despite concerns about potential conflicts of interest.
H20’s chief investment officer Vincent Chailley will replace chief executive Bruno Crastes on the board of the German firm “to ensure continued H20 representation”.
Read more: Should we get rid of best buy lists for investment funds following the Neil Woodford scandal?
“H2O is committed to continuing to work with Tennor in the future,” a spokesman for H20 said in an email which confirmed the changes in board representation, Reuters reported.
Morningstar put one of H20’s funds under review yesterday due to concerns about investments in illiquid bonds issued by firms related to Lars Windhorst, who owns investment holding company Tennor.
The fund ratings site placed the €2.3 billion global macro fund H2O Allegro “Under Review”. Shares in French investment bank Natixis tumbled following the analyst note. Shares are down 4.77 per cent this afternoon.
“While this sleeve is small in absolute terms and we do not believe it poses an immediate risk to the fund’s performance, the concentration of these investments on a cohort of companies linked to the same individual is a cause for concern,” said Morningstar analyst Mara Dobrescu.
“We also note that in May 2019, H2O’s chief executive Bruno Crastes was named a member of the advisory board of Tennor Holding, Lars Windhorst’s most recent holding company, which raises the appearance of a possible conflict of interest.”
However, Crastes said he would not change the fund’s allocation based on Morningstar’s concerns. The fund manager insisted he would stand by his investment strategy, Citywire reported.
Read more: FCA chief Andrew Bailey calls on Neil Woodford to waive management fees
Concerns over illiquid assets in open-ended funds have spiked following the suspension of Neil Woodford’s equity income fund earlier this month.
The fund was frozen after a rush of investor redemption requests.