Suncorp downgrade

Last week’s loss of nine members of its investment team has cost Suncorp dearly, with ratings house Morningstar having downgraded its ratings to an avoid strategy for new investors.

Morningstar’s analysis suggested the outlook was bleak for Suncorp’s Australian equities capability following the resignation of the entire investment team in late November, even though it had appointed its general manager of investment strategy, Stephen Lam, as interim head of equities until a more permanent solution could be found.

He said that while Lam has been in the industry for many years, and will at least initially be able to draw on those who are staying, this represents a far from ideal situation for investors, given the relatively high level of portfolio turnover associated with the strategy and Lam’s lack of formal involvement in the team’s decision-making process.

The Morningstar analysis said despite Suncorp’s best efforts, there were real doubts about its ability to attract suitably qualified personnel in a reasonable timeframe given the war for talent taking place in the Australian equities space.

It said that the situation highlighted the importance of appropriate remuneration structures that both align investment staff interests with those of their investors as well as encourage long-term staff retention.

The analysis said that Suncorp had yet to implement any material long-term incentive program that may have helped prevent the current situation.