Fund Times: Updates for Aberdeen, Above the Index, Acadian, Challenger, Credit Suisse, DWS
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In recent news from the funds management industry you may have missed, there have been staff changes at quant shop Acadian and Zurich Australian shares submanager Above the Index, while Challenger has replaced its Head of Fixed Income. Aberdeen has appointed a new Global Head of Fixed Income. Change is on the way for Credit Suisse's international share funds, and DWS is replacing the underlying investment manager for its global hedge funds.
Aberdeen appoints new head of global fixed interest
Aberdeen Asset Management continues to reshape its investment management operations after acquiring parts of Credit Suisse's funds management business. Aberdeen has recently appointed Paul Griffiths as its new Global Head of Fixed Income. Griffiths formerly occupied the same position at Credit Suisse from early 2007, and will from June oversee the teams in Sydney, Singapore, London, New York, and Zurich. Griffiths' Aberdeen predecessor, Gary Bartlett, is leaving the company.
In a related development, on 20 February 2009 we moved our Morningstar Recommendation for Credit Suisse's international share funds from 'Highly Recommended' to 'Hold'. Credit Suisse has advised that Aberdeen intends to replace existing submanager Capital International with management by its own in-house global shares team at some point after 30 April 2009. This change will affect funds such as Credit Suisse International Shares, Credit Suisse Unhedged International Shares, and Credit Suisse Select Investment International Share.
While Aberdeen's investment capabilities are reasonable, they're also very different to the way Capital invests. At present, the funds have a growth investment style leaning, which under Aberdeen's management would be more of a value tilt. The management of the strategy is secure in the short term, but investors will need to review how the new approach will fit into their overall portfolios after the change. We will continue to monitor this situation closely, and update our report when we receive more complete information.
Above the Index appoints analyst
Above the Index Asset Management, the boutique which manages Zurich's Australian share fund assets, has appointed Chris Exall as an Analyst. His background includes time working in quantitative modelling, portfolio optimisation, and risk analysis with absolute return fund manager Saltbush, as well as a stint in quantitative equities research with ABN AMRO Australia. Exall will spend half his time on stock research, and half on quantitative responsibilities, and will contribute to the management of funds including Zurich Investments Australian Value Share, Zurich Investments Australian Value Retail Share, and Zurich Super Australian Value Share.
ATI replaced Constellation as investment manager of the Zurich Australian share assets in September last year, and selects stocks using a relative value approach. Exall's appointment takes the firm's staff complement to seven, headed by former Tyndall portfolio manager Simon Burge. In our most recent report on the strategy, released in December 2008, we gave it a Morningstar Recommendation of 'Investment Grade', commenting that "ATI's declared intention of bolstering its team going forward is a move in the right direction".
Staff change at Acadian
Quant shop Acadian Australia has hired Katrina Khoupongsy as a Research Analyst. Khoupongsy has worked previously in quantitative research and investment management at ING Investment Management and BT Funds Management. In other staff changes, Head of Portfolio Construction Jim Klapman is returning to the firm's Boston office to a role managing asset consulting relationships for Acadian globally.
Acadian offers both long-only and long/short vehicles in Australia, which include Colonial First State Wholesale – Acadian Wholesale Australian Equity, Colonial First State FirstChoice – Acadian Australian Equity, and Colonial First State FirstChoice – Acadian Wholesale Australian Equity Long Short. The long-only and long/short strategies both currently have Morningstar Recommendations of 'Recommended'.
Challenger replaces head of fixed income
Challenger Head of Fixed Income Paul van Ryn has left the firm, and has been replaced by Bob Sahota. Sahota has assisted with management of the High Yield Fund, and was previously a credit analyst at PIMCO and worked in AMP's fixed interest team. Senior Portfolio Manager Phillip Strano has also left the firm. Challenger has transferred Steve Sutinen, a portfolio manager in Challenger Life’s Debt and Alternative Investments team, to the funds management team to work with Sahota.
Van Ryn was responsible for the creation and management of Challenger's High Yield investment strategy (available through funds such as Challenger Wholesale High Yield). Challenger had been severely affected in the turbulent credit market environment by its exposures to sub-investment-grade credit, asset-backed securities, and hybrids. In October last year, the firm halted redemptions from the High Yield funds, and instituted a regime in which withdrawals will be allowed on a quarterly basis as investments are sold or mature.
Challenger has subsequently been carefully selling assets when it can to increase the level of cash in the portfolio to fund anticipated redemption requests. The first redemption window opened on 23 January and closed on 20 February, and the firm is currently processing requests on a pro-rata basis.
Because of these liquidity restrictions, in October 2008 we moved our Morningstar Recommendation to 'Hold', commenting that "those considering High Yield should look elsewhere for now, while existing investors have no option but to remain until liquidity permits a decision". Following van Ryn's replacement by Sahota, our fund research analysts have reconfirmed the existing 'Hold' recommendation, and will update relevant references in our research report.
DWS replaces hedge fund manager
DWS Investments has completed a strategic review of its Australian-offered hedge funds DWS Strategic Value and RREEF Global Equity Opportunities. Former investment manager and Deutsche Asset Management subsidiary Topiary Fund Management is winding up the majority of its funds, and the locally-offered DWS hedge funds invested in these. The firm has elected to switch investment management to Stamford, Connecticut-headquartered K2 Advisors. K2 – unrelated to Campbell Neal and Mark Newman's Melbourne boutique K2 Asset Management – was established in 1994 and also has offices in Chicago, Hong Kong, London, New York, Sydney, and Tokyo. DWS ceased accepting applications for and processing redemptions from the Strategic Value and Global Equity Opportunities funds in December last year, and has now extended this during the transition process. After DWS announced the review, we moved our Morningstar Recommendation for the Strategic Value fund from 'Investment Grade' to 'Hold'. We'll be keeping this in place until the transition has been completed, and then reassessing the Strategic Value strategy and publishing an updated report.