A new management team atNorwich Union’sfunds management arm,Portfolio Partners, could help the fledgling group reverse the problem of rapidly outflowing funds, according to the latest business and management report into Norwich byMorningstar.
Portfolio Partners saw funds under management drop by $1.7 billion in the course of 2001, to $9.9 billion at year-end. This contributed to a 50 per cent drop in after-tax profit to $2 million in the same year, when investor confidence was also affected by the departure of key managerial staff.
Another concern is that parent firm Aviva, formerly known as CGNU, will channel most of its money into Norwich Union’s Navigator administrative system, leaving Portfolio Partners under-funded and under-supported, Morningstar says.
The ratings agency awarded the funds manager with a ‘three’ rating out of five, and said stability and profitability were weak at Portfolio Partners, but poised for improvement over the long-term.
Morningstar says the recent appointment of several key executives should help to turn the business around.
“We expect the worst is now over, as organisational restructuring has been completed, and Portfolio Partners has a renewed focus on its core activities,” the Morningstar report says.
“The old guard has now changed and Portfolio Partner’s new management team is now firmly-entrenched, with the majority of new process and management initiatives already in place.”
The team, which includes managing director Craig Bingham – who replaced the group’s co-founders, Keith Ince and David Slack, who retired earlier this year – has already upgraded the Navigator platform, while an additional team has been created to assess and rationalise Portfolio Partners’ existing product line.
Infrastructure at Portfolio Partners could be improved, with systems lacking sufficient flexibility to split fund size into entry fee and nil entry fee pools, Morningstar says. However, plans are in place to implement a new unit trust system by early 2004.
And compliance is one of Portfolio Partners’ strengths, especially its remuneration structure, which ties personnel bonuses to compliance with investment guidelines, Morningstar says.
The business and management strength rating makes up 25 per cent of Morningstar’s overall rating for Norwich Union Australia, which is made up of Norwich Union Life, Navigator and Portfolio Partners.
