Merrill staffers defect to new Challenger backed boutique
Challenger Financial Services will facilitate the establishment of a new Australian equities boutique to be run by the three key portfolio managers who walked out on Merrill Lynch Investment Management on Wednesday.
The new boutique, of which Challenger will take a 25 per cent stake, will be formally launched in the third quarter of this calendar year, a Challenger spokesperson confirmed yesterday.
The boutique will be the third quarter-owned fund manager established by Challenger, adding to global shares manager Five Oceans and small caps manager Kintetic, which was formed by the core of HSBC’s previous equities team.
The departure of senior portfolio managers David Pace and Matthew Ryland and manager Marc Hester has cut MLIM’s local seven man equities team down to four, and occurred just two months after the global asset manager announced it would merge with fellow global giant Black Rock.
Research house Standard & Poor’s has placed MLIM’s equity funds ‘oh hold’ pending a review of the team’s capabilities.
"This comes at a bad time for Merrill Lynch, following the recent announcement of the merger with BlackRock," said S&P fund analyst Marcus Hanel.
"It is also unfortunate given the recent strong performance of the Australian Share Fund over the past 12 months, following a long period of poor performance and other staff departures."
As a positive for MLIM, the head of its equities team Mark Himpoo, has remained at the helm. Challenger has denied reports this morning, and claims from inside sources, that he turned down an offer from Challenger to leave with the other three and head up the new boutique.
Research house Zenith has already expressed its concerns over MLIM’s staff losses, but has not downgraded any related funds because they are not on its recommended lists.
“While Zenith is comfortable that the departures from the MLIM Australian equities team are not related to Black Rock’s commitment to the Australian market, it does severely dent the capabilities of the team who had only recently started to “turn its performance numbers around” following almost four years in the wilderness,” said Zenith.
Other research houses have yet to issue updates on any MLIM funds.
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