Shares in investment trust River & Mercantile UK Micro Cap (RMMC) have started to recover after falling nearly 20% in the days after fund manager Philip Rodrigs was pushed out (7 Feb).

Reports suggest conduct issues relating to Rodrigs were unearthed after more stringent systems and controls were drafted in by asset manager River & Mercantile (RIV) following an ongoing FCA competition investigation involving R&M and other investment managers relating to IPO price fixing.

River & Mercantile said Rodrigs had left the business ‘following an investigation into a professional conduct issue’ although it clarified the conduct issue was unrelated to his portfolio manager responsibilities.

Rodrigs was also manager of open-ended funds River & Mercantile UK Smaller Companies (GB00BC4DSV56) and R&M UK Dynamic Equity (GB00B7H1R583), which have subsequently seen an estimated £43m of outflows according to calculations by stockbroker Numis on 12 February.

Numis forecasts £650m of net outflows by mid-2018 in these two funds, accounting for just over half of the combined assets under management (£1.2bn) before the news.

Stockbroker AJ Bell has removed River & Mercantile UK Smaller Companies from its ‘favourite funds’ list on the grounds that Rodrigs was considered to be a vital part of the fund’s investment process.

His departure has led to the fund being replaced by Franklin UK Mid Cap (GB00B8K8HH50) on AJ Bell’s preferred funds list. (JC)

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