Ratings houses respond to staff movements

Both Standard & Poor’s (S&P) and Lonsec have reviewed the ratings assigned to the Australian equities offerings from Colonial First State Global Asset Management (CFS) and UBS in the wake of personnel changes at each fund manager announced yesterday.

The reviews were triggered by the news that CFS head of Australian equities Simon Shields was leaving his current post to replace his counterpart at UBS, Paul Fiani, who was on his way to set up his own boutique funds management business.

Of the two ratings houses, S&P acted in a more comprehensive manner giving all of the large cap Australian equities funds run by CFS an ‘on hold’ status. This decision affected a total of 24 funds managed by CFS.

S&P fund analyst Jane Wu said: “S&P’s decision to put all the funds ‘on hold’ reflects our ongoing concerns with the GDP Plus team in its inability to retain senior personnel, particularly at the portfolio manager level.”

Shields is the third member of the CFS Australian equities team to depart in recent months and comes hot on the heels of the news that senior portfolio manager James Taylor will return to BT Funds Management in August, and the loss of junior portfolio manager Justin Lannen to Macquarie in February of this year.

“The continual loss of experienced staff, large funds under management in Australian equities, and disappointing performance weaken the attractiveness of the GDP Plus capability,” Wu added.

In contrast, Lonsec only placed the CFS Australian Share Fund, the CFS Imputation Fund and the CFS Geared Share Fund on ‘fund watch’.

The UBS Australian Share Fund was also put ‘on hold’ by S&P and assigned ‘fund watch’ status by Lonsec.

In light of the staff movements CFS announced that its chief investment officer David Dixon has taken on the responsibility of acting head of Australian equities in the interim.