Theannouncement last month of the impending departure of Greg Perry from Colonial First State Investments and the promotion of his colleague Chris Cuffe to one of the top jobs within the combined Commonwealth/ Colonial group, ends a 14-year association between two of Australia’s most successful fund managers.
Perry and Cuffe joined First State Fund Managers — at the time a small investment arm of the State Bank of New South Wales — within months of each other in late 1988.
Within two years, Cuffe was chief executive and Perry was head of Australian equities of the group, which would ultimately evolve into Colonial First State Investments.
Together they were instrumental in building Colonial First State into one of this country’s most well-known investment management organisations, growing the group’s funds under management from less than $1 billion in 1990 to almost $50 billion today.
The dramatic growth was a reward for top performance across all major asset classes, but it has always been the group’s (up until now) impeccable record in Australian equities under Perry which has been the cornerstone of its success.
Perry, whose contract as head of Australian equities at Colonial First State was up for renewal in June this year, will retire from the group for family reasons. But analysts are also seeing the move as an astute manoeuvre, allowing Perry to leave Colonial First State at the top of his game.
Perry has found it harder and harder to outperform in recent times as Colonial First State’s funds under management has burgeoned.
The three-year rolling outperformance of the group’s flagship Australian equities Imputation Fund, managed personally by Perry, has fallen from 10.91 per cent three years ago to 7.29 per cent today.
Even so, Perry’s departure is being seen as a blow to the Commonwealth Bank, which acquired Colonial First State at a cost of almost $450 million as part of its $10 billion takeover of the Colonial group in 2000.
At the time, the Commonwealth went to extraordinary lengths to tie Colonial’s highly regarded team to the bank, including signing individuals to generous two-year golden handcuff agreements — agreements that are believed to run out in June.
The agreements are understood to have made Perry and Cuffe some of the highest paid individuals in the Commonwealth group.
The saving grace for the Commonwealth is that it has managed to hold onto Cuffe, whose contract was also due to run out in June.
Immediately after the announcement of Perry’s impending departure, analysts were questioning why someone as ambitious as Cuffe would want to continue at Colonial.
The answer came a few days later when the Commonwealth announced it would be merging Commonwealth Investment Management and Colonial First State into one asset management business under Cuffe’s leadership.
Importantly, the Australian equities teams of both groups will remain separate, recognition of their different philosophies, but also of Colonial First State’s long held reputation in Australian equities.
Colonial First State’s Australian equities team will also not take on any additional funds as a result of the restructure, further acknowledgment perhaps that its highly successful investment process is becoming harder to replicate as its funds under management increase.
Cuffe, in his new role, will now run the biggest consolidated funds management operation in Australia. Perry, for the time being, will be spending more time with his family. Both would no doubt agree that it is the end of an era at Colonial.
