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Fund Times: Updates for Australian Ethical, GMO, Investors Mutual, Perennial, Schroders, UBS

Phillip Gray  |  12 Mar 2008Text size  Decrease  Increase  |  

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In recent news from the funds management industry you may have missed, Australian Ethical is losing Investment Manager David Ferris; there's more staff change at GMO; restructuring at Investors Mutual and Perennial International; and Schroders and UBS have appointed new analysts.


Australian Ethical loses Investment Manager
Australian Ethical Investment Manager David Ferris will leave the company on 27 March. The firm said Ferris was leaving to pursue interests in the non-government organisation sector after seven years with the company, and that it was "examin[ing] future leadership arrangements for its investment area". The existing team of Alistair Clark, Noel Hyland, and James Jordan is taking responsibility for the shop's funds in the interim.

Ferris' successor has some work to do, as the performance of the company's funds has generally been in decline. Australian Ethical – Equities has been a consistent bottom-quartile performer among retail mid-/small-cap unit trusts (probably in part because of the opportunistic global shares exposure). Australian Ethical – Large Companies Share was top-quartile over the past five and seven years, but slumped to third-quartile for the past three years (again, perhaps, because of higher recent offshore investment). The performance of Australian Ethical – Balanced has mimicked that of the large-cap share fund, falling from first and second quartile among retail multi-sector balanced trusts over the last five and seven years, to fourth quartile over the past three. The firm also launched Australian Ethical World in July last year, which is run from Australia using access to global databases and broker research, webcasts and public information, and offshore visits by the firm's analysts.


More staff change at GMO
The arrival of new GMO Head of Australian Equities Rick Suvak last December has now been followed by several departures. Research Analyst Michael Booth left the firm in late February, and Portfolio Trader Steve Castellan is leaving in March. The firm said that it was "considering adding resources to the team on an opportunistic basis".

We moved our Morningstar Recommendation for GMO's Australian shares strategy from 'Highly Recommended' to 'Investment Grade' in August last year, following the departures of Max Cappetta and Anthony Corr. We'll be reassessing this, including these most recent departures, in our next large-cap sector review, scheduled for May/June this year.


Investors Mutual restructures Investment Management
Sydney boutique Investors Mutual has made some major changes to its investment management structure and team responsibilities, particularly affecting Investors Mutual Wholesale – Australian Share.

Investment Director Anton Tagliaferro has assumed direct responsibility for management of the shop's large-cap funds, replacing former portfolio manager Paul Frost, who has left the firm, as has analyst Shaun O'Malley. Analyst coverage has been restructured, removing the previous divide between large- and small-cap coverage in favour of focusing on sectoral responsibilities.

Finally, the shop has also hired two analysts. Chris Prunty previously held roles at Ivany Investment Group, Confluence Asset Management, CCZ Equities, and AMP Capital Investors, covering financials, transport, consumer discretionary, and consumer staples stocks. The second appointment, Mark Wade, was previously an associate research analyst at Ord Minnett, and has also worked at the CSIRO and in academia.

After discussion with Investors Mutual about the nature of the changes, and consideration of Tagliaferro's already substantial role in investment management and stockpicking, we have elected to leave our existing Morningstar Recommendations of 'Recommended' (for large-caps) and 'Highly Recommended' (for the Future Leaders and the now-closed Smaller Companies strategies) unchanged at this stage, although the latter may change as a result of the small-cap sector review we currently have underway.


Perennial revamps International Equities
Perennial Investment Partners has reorganised its international shares investment management, bringing both the Perennial International and Perennial Asia boutiques under the management of Head of Perennial Investment Partners International Clay Carter. Former portfolio managers Diane Lin and Charles Stodart have left the firm as a result.

The funds affected most directly are Perennial Asian Shares Wholesale, Perennial Japanese Shares Wholesale, and Perennial Japanese Equities. In September last year, we moved our Morningstar Recommendation for the broader international shares strategy – for funds such as Perennial International Shares Wholesale 5667 and Perennial International Equities 8630 – from 'Investment Grade' to 'Hold', after Carter's assumption of control of the international capacity. We commented that we expected further change, and that "until there is clear evidence that [the new structure has] bedded down successfully, investors should hold off investing in this strategy", and that remains our view.


Schroders appoints Industrials Analyst
Schroder Investment Management has hired Gregg Taylor as an industrials analyst. Taylor most recently spent two years with Bridges Institutional Broking, and worked previously in analyst roles at Wilson HTM, Skandia, and MLC. Taylor will work with Martin Conlon and his colleagues at Schroders running funds such as Schroder – Australian Equity W Class and Schroder – Australian Equity S Class. The appointment follows those of resources analyst Alex Mears last December, and Peter Fullerton to the newly-created role of Head of Credit Research in February.


UBS hires in Domestic Property
Finally, UBS Asset Management has appointed Michelle Leong Willimott to work with Andrew McGrath and David Curtis managing UBS - Property Securities, in particular maintaining forecasting models and analytical processes. Willimott previously ran her own real estate consulting business and worked at CB Richard Ellis and the Property Council of Australia. In our most recent report on the strategy, published last month, we commented that despite the departure of long-time leader John Snowden and a disastrous position in Centro Properties Group, that it was our view that the astute and focused team gave us confidence that UBS will prosper once again. Willimott's appointment will hopefully be another step in the right direction.