Ninth Aussie manager for MLC questioned

MLC has strayed further down the road of “over-diversification” in adding a ninth Australian equities manager to its portfolio, a Morningstar analyst has said.

Highbridge Capital, a new boutique of executives from current and former growth managers for MLC, has just been awarded 6 per cent or just under $1 billion within MLC’s $16 billion Australian equities fund.

Morningstar analyst Bianca Rose was concerned that Highbridge’s multiple portfolio manager approach was “pretty much the same” as that of Concord Capital, whose MLC mandate was reduced to make way for the new manager.

Even though their styles are different, Rose questioned the addition.

“I haven’t changed my view from when MLC added its eighth manager, that they’re risking getting a lot of opposing views within this portfolio which will cancel each other out, and you end up with index management,” said Rose, who will release a report this week that also says the management expense ratio of the MLC fund is not as low as its scale suggests it should be.

MLC has defended the addition of Highbridge.

“The manager is comprised of an experienced investment team that has a high conviction, tax-effective investment approach that is well aligned with our clients’ needs… the new [Australian equity] manager allocations broaden the strategy’s diversification of insight across more managers and reduce our client’s manager related risks and dependencies,” MLC said in an update to clients.