Uncertainty fuels AMP downgrade
VanEyk Researchhas downgraded oneAMPfund and placed another on hold, after negatively reassessing the group’s business management rating and the uncertainty now surrounding the international component of its asset management business.
Van Eyk downgraded the AMP Enhanced Index Fund from “a weak A to a B” and placed the AMP Balanced Fund on hold, with a review of the rating to be undertaken in three months.
“The obvious negative for investors is the lack of international expertise residing within the operation after the proposed split takes place,” van Eyk Research associate director Dragana Timotijevic says.
Van Eyk argues that over the long-term, international equities and fixed income will be affected as Henderson is divided between Asia Pacific and the group’s northern hemisphere operations.
“Given that AMP in Australia has entered into a joint venture surrounding a multi-manager international equities pool, it would not be surprising if it terminated the arrangement with Henderson for international equity management,” Timotijevic says.
Van Eyk believes AMP will be faced with regaining access to international knowledge — both in developing a manufacturing and distribution capability.
Timotijevic notes the dilemma facing large domestic financial institutions is that when they fail to expand internationally they are criticised for slow growth, while invariably when they do they are criticised for “bungling it”.
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