Fund Times: Updates for Austock, Credit Suisse, SG Hiscock, Legg Mason, MIR
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In recent news from the funds management industry you may have missed, Austock and Credit Suisse have appointed new domestic large-cap staff; SG Hiscock has hired for its Absolute Return strategy, offered by Equity Trustees; MIR has lost one of its qualitative analysts; and Legg Mason has made changes to its multi-sector fund asset allocations.
Austock hires equities staff
Austock Asset Management has hired two staff to work with Head of Australian Equities Silvio Gasparet and existing analysts/portfolio managers Adam Scully and Jono Gourlay. Investment Manager Stuart Larke worked from 2000 – 07 at Goldman Sachs JBWere, finally as Director/Research Analyst in the Emerging Companies team, and before that at KPMG Corporate Finance. The other hire is Wesley Nation, who was previously at E.L. & C. Baillieu Stockbroking as a research analyst, and has an engineering background. Larke and Nation will help run the five-star Austock Australian Equities, and Austock Imputation Bond Australian Equity, a four-star fund launched in August 2004. At 31 December 2007, the underlying portfolio featured in the Large-Cap Blend square on our Style Box.
Credit Suisse hires large-caps investment manager
Credit Suisse has appointed Heath Behncke as Director and Investment Manager, Australian Equities, reporting to Head of Australian Equities Stephen Giubin. Behncke will concentrate on the financial, infrastructure, and utilities sectors, contributing to the management of funds such as Credit Suisse – Australian Share and Credit Suisse Select Investment – Australian Share.
Behncke most recently had a brief stint as a senior analyst at Magellan Financial Group, after six years at Perennial Value. In related news, Anthony El-Khoury has also joined the team as an analyst and assistant dealer. In our most recent update on this strategy, published in January this year, we upgraded our Morningstar Recommendation from 'Hold' to 'Investment Grade', on the grounds of cautious optimism about the changes Giubin has put in place.
Staff change for Equity Trustees' Absolute Return strategy
There's also been staff change recently at SG Hiscock, the fund manager responsible for Equity Trustees' Absolute Return strategy. James Ewinger has left the firm for an opportunity in Hong Kong. His replacement as portfolio manager/analyst is James Evans, formerly a resource stocks analyst at stockbroker Tolhurst and at ANZ Institutional Banking. Evans will work with Sam Scollo running the portfolio. The change affects the A$458.53 million EQT SGH Wholesale Absolute Return – currently a one-star fund among the funds in the wholesale Large-Cap Blend category – and EQT SGH Absolute Return, a three-star retail fund.
The Absolute Return strategy invests in a mixture of Australian and New Zealand shares, cash, and derivatives, and portfolio managers can short-sell stock positions. The portfolio was at 31 December 2007 invested primarily in top 100 stocks (76.01 percent of portfolio value), with 5.69 percent in small-caps, and 20.80 percent derivatives exposure. Major holdings included BHP Billiton, Woodside, CSL, Woolworths, and the banks. In our most recent research report, published in February 2007, we gave Absolute Return a Morningstar Recommendation of 'Investment Grade', but advised that it should be used as a Supporting Player in a portfolio given its eclectic nature, describing it as a "quirky strategy [with] a degree of appeal".
And another departure from MIR
In further staff change at MIR Investment Management, qualitative analyst Maurizio Viani has resigned for family reasons. The firm said it was recruiting for a replacement, and that in the interim Viani's responsibilities would be covered by the analyst team headed by Derek Ovington. MIR recently appointed Robert Trevor as Head of Quantitative Hedge Fund Research, and Stuart Paterson as Portfolio Coordinator, the latter a replacement for Jerome Blair, another recent departure.
Legg Mason introduces alternative assets to multi-sector funds
Legg Mason Australia has amended the underlying asset allocations for its multi-sector funds. The firm has introduced an allocation to 'alternative investments', with a three percent benchmark weighting and a maximum weighting of six percent for Legg Mason Balanced, Legg Mason Diversified, and Legg Mason Growth. This comes at the expense of existing allocations to domestic and global bonds and international equities for the Balanced Trust, and from all the asset classes for the Growth Trust.
This alternatives exposure is achieved through investment in the Legg Mason Permal Investment Holdings Trust, a multi-manager absolute return vehicle run by Legg Mason subsidiary Permal. This Trust had 103 underlying investment managers at 30 June 2007, and was focused primarily on US long/short strategies (30.0 percent); global macro (16.0 percent); global long equity (15.0 percent); and emerging markets (seven percent). Prominent managers included James Pallotta, which combines a global macro view with US stock selection; US technology and healthcare specialist Raj Rajaratnam; and Michael Gordon, a fundamental long/short manager which focuses on expected earnings.
For Legg Mason Wholesale Defensive, the firm has reweighted the fixed interest allocation to favour global over domestic bonds, to increase the potential investment universe. From 31 January, the benchmark asset allocation has been 32.50 percent global bonds (previously 27.50 percent), and 27.50 percent domestic bonds (previously 32.50 percent). The cash, listed property, and Australian shares allocations remain unchanged.
In June last year, Legg Mason increased the maximum emerging markets debt exposure in Legg Mason Core Plus Global Bond from five to 10.0 percent, and raised the maximum exposure to any single sub-investment grade corporate debt issue from one to two percent. The firm also recently introduced the Brandywine global equities strategy to the Australian market, and launched a new website.