Challenger signs up 452 Capital

Challenger Financial Serviceswill allocate 25 per cent of funds flowing into its soon-to-be-launched Boutique Australian Share Fund to 452 Capital. The move allows investors to indirectly access the boutique manager despite the latter’s exclusive retail relationship withColonial First State.

452 Capital already has multi-manager relationships withInTechandWarakirri Asset Management. However, Challenger’s new boutique fund, which will also allocate funds toOrion Asset Management(25 per cent),Investors Mutual(20 per cent), Alpha (20 per cent) andGMO Australia(10 per cent), is the first to offer retail investors access to the manager without going through Colonial.

The move is likely to irritate Colonial, however 452 Capital investment director and co-founder Peter Morgan is downplaying the deal and says, “if investors want exclusive access to us then they still have to go through Colonial to do so”.

According to Challenger the manager-of-managers fund will take advantage of two growing trends in the industry — the emergence of boutique investment firms and the rising popularity of outsourcing portfolio construction.

Challenger will also leverage off an exclusive retail distribution deal struck with Orion when it launches the Challenger Orion Australia Share Fund before the end of the month.

According to Challenger funds management and distribution general manager Rob Adams, the rollout of the new funds is partly in response to claims that Challenger has a limited product range centered around its Howard Mortgage Trust and annuities business.

However he says the group has a small cap Australian equities fund, which is AA rated byvan Eyk Research, its own Australian share fund, which has been top quartile for the last nine years while its High Yield fund is attracting inflows of $10 million per week.