The change was implemented in mid-June. 

Advance has stated the decision to change managers was to increase the multi-blend fund’s ability to adapt to short-term expected market volatility and to take advantage of the current investment climate. This also reflects Advance’s active management approach to protect investors’ interests and deliver its return objectives. 

As part of the changes, the Colonial First State mandate is terminated while the Perennial allocation is halved. In addition, Aberdeen Asset Management and AMP Capital Investors Ltd are added to the blend. 

11 July 2012

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The fund is currently a developed market (ex Australia) global bond fund. From June 20, 2012, the fund will be permitted to invest up to 10% in each of emerging-market debt and short-dated Asian market debt. 

As both allocations will be in local currency, Aberdeen will widen the Australian dollar hedging range to 80%–120% from 90%–110%. 

There will be no change to the fund’s benchmark or objectives but investors should be aware that the changes mean the fund may hold a portion of sub-investment grade and non-developed market debt from time to time.

These changes will be reflected in Aberdeen’s new product disclosure statement (PDS) issued on June 20, 2012.

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After 11 years at Hunter Hall, Mr. Buckland is leaving the firm effective June 1 when Michael Walsh will take over as interim CEO until a permanent replacement is found.

Hunter Hall has also announced the appointment of two portfolio managers, Jonathan Rabinovitz (who is returning to the company) and Simon Bridger. They will commence on June 4 and July 1, respectively.

Mr Buckland’s resignation is the second senior departure from the team in six months, after portfolio manager and deputy chief investment officer (CIO) Jack Lowenstein’s resignation in November 2011. We believe that the latest departure represents further significant organisational disruption at Hunter Hall. 

S&P Fund Services analyst Tom Mills said: “We consider it prudent to place the funds ‘On Hold’ to enable us to fully assess the impact of these changes on Hunter Hall’s organisation and culture. We are currently in the process of conducting our Global Equities sector review and expect to publish our findings, including those on the Hunter Hall funds, in June”.

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The review rated 44 headline funds, and a total of 96 product offerings. Seven funds were upgraded and two were downgraded. The report finds that the group remains highly competitive, with the average manager continuing to deliver performance well ahead of market benchmarks in recent years. 

Over the past three years the median manager returned close to 4.1% per year (net of fees) above the Small Ordinaries benchmark. The report also notes that the smaller capitalised end of the market is dominated by active bottom-up managers employing approaches that are less benchmark-aware compared to large-cap strategies. At the time of S&P’s review the rated peer group held an average of 32% in non-index exposure. 

Senior portfolio manager pairings form the backbone of most small-cap offerings, and highlight that key person risk remains prevalent across the sector. “It is therefore important that senior members display a healthy working relationship and encourage strong team dynamics,” said John Huynh, analyst at S&P Fund Services. “During 2011 notable departures were seen in the UBS and Macquarie teams, but there was stability across the remaining peer group which was underpinned by effective lock-in structures,” Mr Huynh said. 

The ratings distribution is concentrated in the four- and three-star rating categories, reflecting S&P’s view that the vast majority of funds in the peer group are capable of delivering risk-adjusted returns in line with their investment objectives. Only one fund, Aviva Investors Professional Small Companies, was awarded a five-star rating. The report notes that a number of top-tier capabilities, including those managed by BT and Eley Griffiths, were constrained primarily due to concerns about capacity.

The capacity issue within small-caps introduces a number of challenges for research houses, given the propensity for higher-rated offerings to attract a greater share of investor flows. “Highly rated offerings can quickly become hindered by strong growth in FUM, therefore we are naturally sensitive to awarding our highest rating to offerings which are at risk of being too large” said Mr Huynh.

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The highest rated funds—all retaining five stars—were PIMCO’s five global strategies, and the Bentham Asset Management Syndicated Loan Fund. There was one newly rated strategy—the Franklin Templeton Global Bond Plus I fund. 

“On the whole, managers had a tough time in the second half of 2011, largely due to short duration and overweight credit calls. These positions hurt performance given the volatility that began to build during this period,” said David Erdonmez, analyst at S&P Fund Services. 

This volatility was a result of a number of key factors which included the lead-up to the sovereign rating downgrade of the U.S., particularly the period surrounding the deliberations on the debt ceiling. Ongoing issues in Europe were also a significant headwind—particularly in regard to the Greek sovereign crisis and the potential for contagion to Spain and Italy. Volatility remained high during the period with a significant flight-to-quality in the government bond sector and subsequent negative movement in spread-related sectors. 

Products in the Global Fixed Income sector are classified into peer groups according to their features. S&P encourages advisers to look at these differences when determining the validity of a strategy for a client’s portfolio.

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AMP Capital will bring the management of its listed property and listed infrastructure capabilities in-house. This has significant implications for both the AMPCB listed property and listed infrastructure teams. While the listed property personnel based in Sydney, Hong Kong, and London will remain with AMP Capital, new investment personnel have been hired to cover the Americas region and will be commencing imminently. Further, a new head of global listed real estate, Matthew Hoult, has been appointed.

The extent of change within the listed infrastructure business is equally as significant. The five-person team will comprise just three former AMPCB personnel, including the newly promoted head of global listed infrastructure, Tim Humphreys. The four Chicago-based investment staff will not remain with AMP Capital, nor will Sydney-based senior investment analyst Sarah Shaw. Two new analyst appointments have been made to AMP Capital’s London office.

“This is a significant development—one which affects a number of AMP Capital-distributed and AMPCB-managed funds. And so, we have placed our ratings on these funds ‘On Hold’. We will meet with AMP Capital shortly, and will seek to resolve the ‘On Hold’ ratings,” said S&P Fund Services analyst Nathan Bode.

The AMP Core Property Fund rating has also been placed ‘On Hold’ following these changes, due to its investment of about 25% of funds under management in the global listed property securities strategy.

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The funds were placed ‘On Hold’ when senior credit analyst Stuart Gray resigned. 

S&P Fund Services analyst Kelly Napier said: “Aberdeen’s local fixed-income team has undergone a period of transition with departures and new hires and is now fully resourced. Experienced head of Australian fixed interest, Vic Rodriguez continues to lead the team in conjunction with other senior members.” 

“New hires have added to the team’s local credit resourcing and includes an experienced senior hire in John Manning. However, the remainder of the credit team does have less experience than peers.” 

All three funds have met or exceeded their objectives over relevant investment periods and delivered solid risk-adjusted returns. This performance is attributed to the consistently applied investment process despite the periodic team changes.

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These were formerly managed by ING Investment Management (Australia). 

UBS Global AM acquired Optimix in June 2011 as part of its acquisition of ING Investment Management (Australia). ANZ Bank’s subsequent purchase of Optimix is part of its broader strategy to offer a suite of multi-manager single sector and multi-sector funds. 

Our fund ratings of multi-sector products available through Optimix will remain ‘On Hold’ pending our formal review of these capabilities.

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This fund is classed as a “sibling” of the Russell High Growth A Fund, which has an existing rating of four stars. 

We define a sibling fund as a fund that invests in an underlying pool or fund that we rate, or, a separate pool or mandate that is managed in exactly the same way by the same investment team as the main capability or “headline” fund.

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The upgrade follows the fund’s continued stability and extended positive risk-adjusted track record and highlights our increased conviction in the team’s ability and process. 

S&P views the market-neutral strategy focused upon corporate events as having a strong risk-management framework that is evident in the performance of the strategy. 

“While we view the boutique manager as relatively less resourced than some of the largest investment houses in the market, a culture of continued improvements to the strategy coupled with an already risk-focused team enables us to hold a higher conviction in the strategy,” said S&P Fund Services analyst Rodney Lay.

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