…as Perry resignation leads to downgrade of Colonial
The announcement thatColonial First State Investments’long time head of Australian equities Greg Perry will resign from his post in June this year has led toMorningstardowngrading its Australian equities trend rating from ‘very positive’ to ‘positive’.
Morningstar says while Colonial First State’s succession planning is commendable, particularly its plan to promote the current senior portfolio manager Ian Harding to head of Australian equities, Perry’s track record will be hard to follow.
“While it is certainly reassuring that Colonial First State has planned the succession well, with Perry’s resignation announced very early before the actual date, and with a strong internal candidate as Perry’s potential successor for the Imputation Fund, his shoes remain huge ones to fill,” the Morningstar report says.
Harding will take over responsibility for all of the fund manager’s Australian equities portfolios except the Imputation fund. Under Perry’s guidance, the Imputation Fund outperformed the S&P/ASX300 Accumulation Index over the five years to 31 January 2002 by 6.7 per cent per annum after fees.
Over the same period, the wholesale Australian Share fund managed by Harding outperformed by 2.6 per cent.
Morningstar notes however in the last two years, Harding’s Australian share fund under performed over the two years to January 31, 2002 by approximately 50 basis points. Meanwhile, Perry’s Imputation fund continued to outperform over this period.
“The Imputation Fund’s value-add comes from both stock selection and aggressive active bets. The Australian Share Fund also takes large active bets, but stock selection has been less consistent by comparison,” Morningstar says.
Morningstar says while the fund manager’s overall five star rating is likely to remain, it is not as confident that Colonial First State will be able to replicate Perry’s experience and expertise.
“While Harding has served as Perry’s back-up portfolio manager, and so has benefited from Perry’s insightful passion and stock expertise, in Morningstar’s opinion it is unlikely that this expertise is fully transferable.”
Morningstar also speculates there could be possible flow on effects for the Australian equities portfolios managed by other Colonial First State portfolio managers, particularly given Perry’s influence over the whole Australian equities team.
Meanwhile, ASSIRT has retained its ‘very strong’ sector rating for Colonial First State’s Australian equities capabilities, while van Eyk Research has placed a hold on the Colonial First State Australian equities Imputation Fund.
InvestorWeb has maintained its hold rating on all three of the Australian equities funds Perry is responsible for, and will be discussing the handover process with Colonial First State management next week.
Recommended for you
Sequoia Financial Group has declined by five financial advisers in the past week, four of whom have opened up a new AFSL, according to Wealth Data.
Insignia Financial chief executive Scott Hartley has detailed whether the firm will be selecting an exclusive bidder for the second phase of due diligence as it awaits revised bids from three private equity players.
Insignia Financial has reported a statutory net loss after tax of $17 million in its first half results, although the firm has noted cost optimisation means this is an improvement from a $50 million loss last year.
With alternative funds being described as “impossible” for fund managers to target towards advisers without the support of BDMs for education, Money Management explores the evolving nature of the distribution role.
