CFS approves first FSI replacement manager

First Sentier Investors Pinnacle CFS colonial first state

17 June 2024
| By Laura Dew |
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Colonial First State (CFS) has confirmed the first alternative manager for its funds, following the closure of four First Sentier Investors (FSI) teams. 

It was announced in April that FSI would be closing its Australian Fixed Income, Global Credit, Equity Income and Emerging Companies teams. These teams encompassed 10 funds combined, affecting $14 billion in assets under management.

The changes are the result of “shifting industry dynamics such as client consolidation, internalisation of investment management and ongoing margin pressures as impacting the outlook for investment businesses”, the firm stated.

Several of the affected funds are Colonial First State Investments Limited (CFSIL) funds. CFS announced in May that it had sourced potential replacement managers, including Janus Henderson and Macquarie, which were subject to due diligence.

CFS has now confirmed that the first of these new managers to be approved is Longwave Capital Partners, which will now run the First Sentier Developing Companies Fund.

This fund seeks to invest in Australian companies with a market cap of generally less than $500 million at the time of initial investment, a strong balance sheet and whose earnings are expected to grow at a greater rate than the Australian economy.

Set up in 1997, the fund has $203 million in assets under management, as of 30 April.

Longwave is an affiliate of Pinnacle Investment Management and was set up in 2018 by founders David Wanis and Jai Beathe who previously worked together at Schroders Australia on the small and mid-cap equities team.

In a statement, CFS said: “Following an extensive review of alternative replacement investment managers, we have appointed Longwave Capital as the new manager of the fund.  

“Longwave will manage the fund with the aim of achieving the existing objective to provide long-term returns that exceed the S&P/ASX Small Ordinaries Accumulation Index. We believe that Longwave is well-placed to achieve that objective.  

“Importantly, Longwave will align the fund’s portfolio to the highly rated Longwave Australian Small Companies strategy and gradually transition the existing portfolio to hold different stocks.”

CFS flagged, however, that with the management change, that fund will no longer satisfy the statutory parameters to qualify as a complying fund for the Significant Investor Visa (SIV) program for the 2024–25 financial year.

Managers are yet to be confirmed for First Sentier Future Leaders, First Sentier Equity Income, First Sentier Target Return Income, First Sentier Australian Bond, First Sentier Global Credit Income, First Sentier Diversified Fixed Interest, CFS Index Australian Bond and Developing Companies (via CFS Managed Investment Fund).

 

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