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Fund Times: AMP Capital in 2009

Phillip Gray  |  25 Jan 2010Text size  Decrease  Increase  |  

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Key events for the AMP Capital Investors funds management business in 2009 included the creation of a single platform for the firm's Australian, New Zealand, and Asian investment staff, changes to the underlying investment managers for the firm's multi-manager Australian and international share funds, new staff in infrastructure and global property, and the closure of the firm's hedge fund to retail investors.

The major development in the AMP Capital funds management business in 2009 came in November, when the firm announced that it had combined its Capital (Australian), New Zealand, and Asian investment teams into one single platform. The move restructured investment staff into sector-specific teams such as resources and financials, working across the Australian, New Zealand, and Asian markets. The move was part of parent AMP's broader strategic plan to become a major player across the Asia-Pacific region.

AMP Capital appointed senior portfolio manager Greg Barnes to run the flagship Capital Australian shares portfolio, the fourth person to lead the strategy since 2001. Barnes' predecessor Gary Armor and former head of Asia-Pacific equities Kerry Series left the firm as a result of the restructure.

Chief investment officer listed assets Mark O'Brien stated that the revamp "provide[d] analysts with greater focus on their sector of expertise, bringing more depth to company research and producing best possible stock insights", and would enable staff to analyse companies against both regional and global backdrops. As part of the reorganisation, AMP Capital also separated the roles of portfolio managers and research analysts, which the firm said would provide clearer career path options.

In other developments in 2009, in June the fund manager altered the line-up of investment managers for its multi-manager international share funds, among them AMP Capital Future Directions Core International Share 15106, AMP Capital Future Directions Hedged Core International Share 15116, AMP Capital Future Directions Hedged Core International Share A 11063, and AMP Capital Future Directions Core International Share A 11062. AMP Capital removed quantitative shops Arrowstreet and GMO, and added Schroders to the existing complement of AllianceBernstein Growth and Value, Edinburgh-based Baillie Gifford, T Rowe Price, and Taube Hodson Stonex.

There was also change to the AMP Future Directions range of multi-manager Australian share funds in 2009, which include AMP Capital Future Directions Australian Share 10637, AMP FLI - Future Directions Australian Share (Original) 122, and AMP FLI - Future Directions Australian Share 11035. AMP Capital appointed boutique Bennelong Australian Equity Partners to manage 14 per cent of the underlying assets, alongside Platypus (20 per cent), Tyndall (20 per cent), AMP Capital (18 per cent, including an 8 per cent small-caps allocation), Ausbil Dexia (10 per cent), BlackRock (10 per cent), and JF Capital Partners (8 per cent). Bennelong was established in July 2008 by former ING portfolio managers Paul Cuddy and Mark East. The firm's standalone Australian share fund, Bennelong Australian Equities 16998, was launched on 30 January 2009.

In August, the fund manager also hired Adam Tindall as director of asset management, a newly-created role responsible for the firm's shopping centres, office, and industrial direct property portfolio. Tindall was previously executive director in property at Macquarie Capital Advisers, and before that spent 17 years in project management and construction, development, and property management at Lend Lease. AMP's direct property funds include AMP Capital Core Property A 13156 and AMP Capital Core Property H 14258.

AMP Capital also created a global listed property and infrastructure joint venture business in 2009 in association with Brookfield Investment Management, formerly AMP Capital Redding Investors, called AMP Capital Brookfield. Chicago-based Nick Tannura was appointed chief executive of the venture. AMP Capital and the former KG Redding & Associates have had a joint venture for global property funds management since 2002. The firm also changed the nature of distribution payments for AMP Capital Global Property Securities 12352, AMP Capital Global Property Securities A 12353, and AMP Capital Global Property Securities H 14257 to quarterly from 30 September 2009.

Like a number of other global property funds with currency hedging, AMP Capital has distributed little income over the past three quarters because of accumulated foreign exchange losses as a result of the sharp depreciation of the $A during 2008. (The $A peaked just above $US0.98 on 16 July 2008, then dropped off a cliff, losing around 40 per cent of its value and sliding to a low of $US0.60 in September. Fund managers had to use the earnings from their underlying real estate investment trust investments - which would normally be paid to fund investors as distributions - to pay for the losses on these currency hedging contracts. Because of this, earlier this year, we warned investors to expect minimal if any income from hedged global property funds for 2009 at least.)

AMP Capital said that while the recent appreciation of the $A had reduced these losses substantially, until they are fully-eliminated, the funds would not be able to make income distributions. In a worst case scenario, the funds may not be in a position to be able to resume 'normal' distributions until March 2013. Because of this, the firm said that it would make quarterly 'tax-deferred' distributions, sourced from dividend payments from the underlying listed property securities, but not from asset sales or borrowing.

November saw the appointment of Rob Verrion to lead AMP Capital's European infrastructure investment business. Verrion was previously chief executive of Angel Trains, and before that, chief operating officer of electricity and gas concern Transco (which subsequently became National Grid). He's also held senior positions with Severn Trent Water, Metrogas, and British Gas.

AMP Capital's infrastructure funds AMP Capital Core Infrastructure A 15839 and AMP Capital Core Infrastructure H 15838 have underlying investments which include Verrion's former employer Angel Trains (a rolling stock leasing company created in 1994 as part of British Rail's privatisation, and a Royal Bank of Scotland subsidiary until sold to Babcock & Brown in 2008), gas distributor Wales & West Utilities, and Spanish oil pipeline and storage group Compañía Logística de Hidrocarburos (CLH).

Finally, in December AMP Capital closed AMP Capital Total Return 17387 to retail investors following an assessment to determine whether investor objectives were being met. Institutional clients still have access but with a new minimum investment amount of $5 million. Investors whose investments are less than the new threshold have until 15 February 2010 to withdraw their money. Following this date, AMP Capital will liquidate their investments and return their money.