S&P downgrades IML small-cap funds
Paul Frost
Ratings house Standard and Poor’s (S&P) has downgraded a number of IML’s Australian small-cap products to two stars.
Four IML funds have been affected by the revised rating following the departure of key personnel, which has seen each drop from four stars to two stars. The affected funds include Investors Mutual Wholesale — Australian Smaller Companies Fund and Future Leaders Fund, Investors Mutual Small Cap Fund and the Sandhurst Professional IML Future Leaders Fund.
Earlier this year, S&P downgraded IML’s large-cap products to two stars following the departure of senior portfolio manager Paul Frost and equity analyst Shaun O’Malley. Since then a further three members of the investment team have resigned, including equities analysts Peter Moller and Tony Watrers and research analyst Vessela Tasker.
S&P analyst Leanne Fook said despite the investment team being restructured, both Moller and Waters were integral to small stock research, as small cap stocks formed a large part of their respective stock responsibilities.
“Staff retention has been an ongoing problem for IML, with the recent departures taking resignations to eight staff, including three portfolio managers, over the past two years,” she said.
“A high level of staff instability will, in our judgement, adversely impact the manager’s capacity to effectively implement its investment process.”
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