Ratings houses unkind to Colonial over Henderson departure
The announcement that Barry Henderson will step away form his role as senior portfolio manager with theColonial First State(CFS) Future Leaders Fund has resulted in four of the five research house downgrading their position on the fund.
Assirt,Morningstarandvan Eykhave all dropped their ratings following the lead ofLonsecwhich moved to a hold position on Thursday after Henderson indicated he would retire in January.
Lonsec gave the manager some praise with the immediate naming of a successor for Henderson in Graeme Burke, senior portfolio manager with CFS’s Developing Companies Funds. Yet it qualified those comments by stating that until January 2001, Burke’s role was more towards company research and not specifically portfolio construction.
Assirt has moved the Future Leaders Funds from four to three stars and the Developing Companies Fund from five to four stars and stated it felt Burke was very considered in his stock views, paying explicit attention to management quality and realistic valuation.
However the research group says it took the action as a degree of accumulated experience will be lost with Henderson’s departure and Burke will be taxed to manage both portfolios.
Assirt also says it will take time for a senior analyst, slated to be appointed, to come up to speed and possibly a longer time period will elapse before another portfolio manager is appointed to assist Burke.
Morningstar has adopted a neutral stance, down from very positive, on its outlook for CFS’s small companies equities management. However Morningstar has reconfirmed its five star for the whole of CFS.
It was also positive in its view of Burke taking over and says he outperformed Henderson for the 12 months to 30 June 2002, outperforming the S&P/ASX Small Caps Accumulation Index ('Index') by 2.9 percent net of fees, compared to Henderson, who had an uncharacteristically weak year, underperforming by over seven percent.
Morningstar says this performance is reassuring but he will need to prove his skill over longer time frames and with the larger portfolio.
Van Eyk has put a hold on both funds but says the rating was in place pending a meeting with CFS this week but was concerned over the number of departures of key people from the equities team including Henderson and Perry.
The research group says the loss of key people may have an affect on the decision making process in the team which was based on interaction between analysts and the portfolio managers with the moves raising concerns over possible furture departures.
The only group not to adopt a negative stance at this time has been InvestorWeb which will maintain its current rating of the Future Leaders Fund as it plans to conduct a full review of CFS's small cap investment capabilities within two weeks.
The group has also said there was no need to respond in a knee-jerk fashion as Henderson would be with the group until the end of January next year.
InvestorWeb removed the the Future Leaders Fund from its six star list earlier this year but says the reason for the move was due to the excessive level of funds under management, not the manager's investment management capability.
AUTHOR
Jason Spits
Recommended for you
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
