Fund Times: Updates for Aberdeen, Acadian, AXA, BGI, Dimensional, Macquarie
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In recent news from the funds management industry you may have missed, Aberdeen has announced more appointments from former Credit Suisse staff; AXA global shares investment manager Alliance Growth's finance sector head is leaving; Barclays Global Investors has listed three further iShares exchange-traded funds; Dimensional's Andrew Cain has been promoted to head up the firm's UK operations; and Macquarie has replaced its emerging markets debt manager.
Aberdeen announces restructured fixed income team
Aberdeen Asset Management has announced appointments to its Australian fixed interest team, as the firm completes its acquisition of parts of the former Credit Suisse funds management business. Existing Aberdeen Australian Chief Executive and Head of Australian Fixed Income Bill Bovingdon will be joined by Victor Rodriguez and Stuart Dear, both currently Senior Portfolio Managers with Credit Suisse. Justin Tyler, a recent Credit Suisse hire, will also move over to Aberdeen, assuming responsibility for inflation-linked bond portfolios. Aberdeen has also stated that it expects to hire a number of other current Credit Suisse personnel.
Acadian replaces head of trading
Acadian Asset Management Head of Global Trading Max Arai is leaving the firm. Arai worked in automating and improving portfolio construction and trading methodologies, and creating broker selection and tracking systems. His responsibilities will be taken on by Jennifer Sjostedt, whose background has been in quantitative research infrastructure and related roles with Geode Capital and State Street. Acadian has also hired Mauricio Karchmer as Director of Portfolio Analytics, and Geoff Kemmish as Chief Data Officer, the latter's role being to maximise the quality and timeliness of the data inputs used in the firm's models. Our fund research analysts will be updating our reports on relevant funds such as Colonial First State FirstChoice – Colonial First State Acadian Global Equity and Acadian Wholesale Global Equity Long Short in our forthcoming sector review of international share funds.
AllianceBernstein global growth finance sector head to depart
Frank Suozzo, the global finance sector head for AllianceBernstein's Global Research Growth team, is leaving the firm on 31 March. His successor will be London-based William Johnston, currently non-US finance sector head, and an employee of the firm since 1998. He worked previously for Fleming Investment Management and the Industrial Bank of Japan in property finance and investment banking. Our fund research analysts are embarking on updates to our reports for international share funds, which will include updates for AXA – Wholesale Global Equity – Growth and AXA Generations – Alliance Global Equity Growth.
Barclays Global Investors lists three new iShares ETFs
Barclays Global Investors listed three additional iShares exchange-traded funds (ETFs) on the ASX on 11 March, iShares S&P Global Consumer Staples(IXI), iShares S&P Global Healthcare(IXJ), and iShares S&P Global Telecommunications(IXP). The new ETFs are a move away from global and country-specific vehicles to ETFs focusing on global stock sectors.
The Consumer Staples ETF's largest constituents are currently Procter & Gamble, Nestle, Wal-Mart, and Coca-Cola, as well as Australian companies Woolworths (1.29 percent), Wesfarmers (0.91 percent), and Foster's (0.45 percent). The Healthcare ETF's biggest weightings are Johnson & Johnson, Pfizer, Novartis, Roche, and GlaxoSmithKline, and a smaller (0.82 percent) allocation to CSL, while the Telecommunications ETF's five largest holdings are AT&T, Telefonica, Vodafone, Verizon, and France Telecom, and the remaining 41 constituents include Telstra (2.58 percent) and Telecom New Zealand (0.23 percent).
In the US, our analysts have described the Healthcare ETF as "making a lot of sense for healthcare investors", because "investors won't find the fly-by-night start-up drugmakers which can fall subject to near-term financing issues or those firms with highly-concentrated product portfolios that can lead to incredible volatility". Our analysts do also caution however that healthcare stock prices are very sensitive to government policy changes, and that the Healthcare ETF is highly-exposed to the pharmaceutical sector's specific risks, such as government regulation, patent expiries, and competition from generic drugs. Data on these three new ETFs is available in the stocks universe in Adviser Workstation.
In related news, Barclays Global Investors has indicated that it is considering selling its iShares business, stating this week that it had "held discussions with a number of potentially interested parties", but had not yet decided whether or not to proceed with any sale. British newspapers are reporting that iShares accounts for about a quarter of Barclays Global Investors' business.
Dimensional's Cain promoted to London-based role
Dimensional Fund Advisors' Australian Chief Operating Officer and Head of International Portfolio Management Andrew Cain has been promoted to Chief Executive Officer of the firm's UK business, effective 1 October. Cain has been a long-serving Dimensional representative in Australia, having established the firm's Asia-Pacific operations in 1994. Dimensional has indicated that he'll continue to participate in the firm's investment and investment policy committees. In our most recent report for Dimensional Australian Core Equity 14318 we noted that Senior Portfolio Manager Graham Lennon has since January 2008 headed the Australian desk and assumed key responsibility for trade execution. (Dimensional has an academically-focused quantitative indexing approach, and does not undertake intensive fundamental research into individual stocks.)
Macquarie replaces emerging market debt manager
Macquarie has replaced the emerging markets debt manager it uses for its Income Opportunities and Diversified Fixed Interest funds. The firm said that it had terminated its relationship with UK-domiciled BlueBay Asset Management because of senior staff turnover and failure to meet investment performance objectives. The replacement is Stone Harbor Investment Partners, a New York-based fixed interest boutique. (BlueBay was itself a replacement in December 2006 for Ashmore.) Stone Harbor's partners, who own 100.0 percent of the firm, worked together previously at Salomon Brothers and Citigroup. It's not often that the words 'Macquarie' and 'fee reduction' are bracketed together in the same sentence, but the previous arrangement with BlueBay of a 20.0 percent performance fee does not apply to the Stone Harbor mandate.
We have updated our research reports for Macquarie Diversified Fixed Interest and Macquarie Income Opportunities incorporating this change. The Diversified Fixed Interest strategy currently has a Morningstar Recommendation of 'Recommended', and is potentially suitable as a core holding. Income Opportunities has a Morningstar Recommendation of 'Investment Grade', and we suggest using it in a supporting role in a portfolio, rather than as a core component, given the potential credit risk.