Fund Times: Updates for Aberdeen, BT, Colonial First State, DWS, Platinum
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In recent news from the funds management industry, BT Financial Group is terminating its global fund-of-fund hedge fund, while DWS is shutting down its concentrated and small-cap global shares funds, as well as its recently-launched precious metals fund. There have been changes within Colonial First State's growth Australian shares team, Aberdeen has announced its intentions for the Australian shares business it is acquiring from Credit Suisse, and the portfolio manager for Platinum's European Fund has left the firm.
Aberdeen announces intentions for Credit Suisse Australian shares funds
Aberdeen has made a further announcement about the future of its Australian shares team in the run-up to the settlement on 30 April 2009 of the acquisition of a large chunk of Credit Suisse's Australian funds management business.
Aberdeen has confirmed that it will be transitioning the management of the Credit Suisse Australian share funds to the existing Aberdeen process, headed by Mark Daniels. (This will be the second such exercise for Aberdeen in the past two years, the firm having completed absorbing the former Deutsche Australian equities funds in January 2008.)
We currently have a Morningstar Recommendation for Aberdeen Australian Equities of 'Investment Grade'. After the New Year announcement that Aberdeen would be acquiring parts of Credit Suisse's funds management business, we moved our Morningstar Recommendation for Credit Suisse's Australian shares funds – among them Credit Suisse Australian Shares, Credit Suisse Private Investment Australian Shares, and Credit Suisse Select Investment Australian Share – to 'Hold'. We'll be revisiting this when the transaction has been completed.
BT winds up global return fund
Following the decision last December to suspend applications and redemptions, BT Financial Group has announced the termination of the firm's fund-of-fund hedge fund, BT Global Return. The decision means that BT joins Colonial First State in withdrawing from offering Australian investors access to a global fund-of-fund hedge fund vehicle.
The fund manager said that it had made the decision to terminate because reopening the fund would mean liquid assets would be used for fulfilling redemption requests, leaving investors who stayed with the fund exposed to the more illiquid assets. This would compromise the ability to satisfy their future redemption requests.
BT said that underlying investment manager Grosvenor anticipated being able to realise "a significant portion" of the fund's assets over the next 12 months, and BT anticipated making the first distribution of capital in late May, and then on a quarterly basis. During the wind-up period, BT is reducing the annual management fee from 0.84 to 0.50 percent. (BT was unusual among fund managers offering fund-of-fund hedge fund vehicles in not charging a performance fee.)
The funds affected by the change are BT's own BT Global Return Investment, BT – Global Return, and BT PPSI – BT Global Return, which had approximately A$870.0 million in combined assets at 31 March 2009, as well as AXA-owned Synergy Superannuation – BT Global Return Pool and Synergy Allocated Pension BT Global Return, also likely to be terminated.
Changes in Colonial First State's growth team
Commonwealth Bank-owned Colonial First State has made some changes to its Australian Equities Growth team. The firm has promoted former Senior Portfolio Manager Small Caps Raaz Bhuyan, who's moving to the firm's large-caps team to take on responsibility for funds including Colonial First State Wholesale – Australian Share and Colonial First State MIF - Australian Share from 1 July 2009.
The firm said the move would enable Head of Australian Equities Growth Marcus Fanning to focus on funds run according to the firm's imputation approach to investing, among them Colonial First State – Wholesale Imputation and Colonial First State MIF – Imputation. Senior Resources Analyst Alan Martin is moving to work with Tim Canham and Wik Farwerck in small-caps research. Finally, former Head of Research Greg Galton left the firm recently for personal reasons.
We are making adjustments to our existing research reports to account for these developments, but their magnitude is not such as to prompt us to make changes to our existing Morningstar Recommendations of 'Investment Grade' for both the large- and small-cap strategies.
DWS shuts down global share, precious metals funds
DWS Investments (the former Deutsche funds management business) has announced that it is terminating three funds, DWS Global Select, DWS Global Smaller Companies, and DWS Global Equity Gold & Precious Metals. The last of these was launched only five months ago, and had attracted A$13.65 million in assets by 31 March. The firm also terminated its emerging markets funds in March.
DWS said that the small amounts of money in the funds was making it increasingly difficult for the portfolio managers to implement their stated investment strategies. Global Select, a concentrated 40-stock portfolio of international shares launched 10 years ago, had just A$2.81 million in assets at 31 March 2009, having peaked at A$39.91 million at 31 December 2001 and dwindled steadily since. The fund was a bottom-quartile performer in the wholesale world large blend category over the three years to 31 March 2009, its -16.78 percent return 3.61 percent below benchmark. Global Smaller Companies was also a bottom-quartile performer among its peer group of mid-/small world growth funds over the past three years.
Platinum Replaces European Portfolio Manager
Platinum Asset Management has announced the departure of Toby Harrop, the portfolio manager for Platinum European, stating that Harrop was moving overseas with his family. His replacement is Clay Smolinski, an analyst who has worked with Harrop over the past three years. (A high degree of supervision by the firm's founder and majority shareholder, Kerr Neilson, can be assumed.)
Harrop was with Neilson, Andrew Clifford, Malcolm Halstead, and Jim Simpson one of the original founders of the Platinum business in 1994, having worked previously at the then BT Funds Management. In the firm's March 2009 quarterly report, Harrop stated that he would remain an investor in the fund.
Launched in June 1998, Platinum European is by far Australia's largest fund dedicated to investing in European shares, the fund's $A148.67 million assets at 31 March 2009 accounting for over half (53.55 percent) of the total A$277.62 million invested in funds dedicated to the region.
The European Fund's five largest individual stockholdings at 31 March 2009 were French pharmaceutical company Sanofi-Aventis (4.10 percent of the portfolio); Lagardere, an industrial conglomerate with publishing, retail, media, and aerospace businesses and another French stock (3.40 percent); German DIY and gardening centre firm Hornbach Baumarkt (3.30 percent); sportswear company Adidas (3.20 percent); and Schneider Electric (3.20 percent of portfolio value).