The loss of Boe Pahari from AMP Capital is giving rise to concerns about staff retention on its infrastructure team.
Rating the AMP Capital Core Infrastructure fund, research house Evergreen Ratings gave the fund a ‘satisfactory’ rating
Pahari had led the team as head of infrastructure equity until his departure in April following the announcement that AMP would be de-merging its private markets business.
“The loss of Boe Pahari from the business will be significant from an operational/strategic perspective, but this is offset by the proposed spinoff and the medium to long-term incentives that will be available to prevent staff churn,” Evergreen said.
“It is unclear what Pahari’s departure means for the business (that is, whether he retires or moves to another investment firm).
“We are closely monitoring the turnover of staff at AMP Capital as we are concerned that the planned de-merger may not yield the long-term staff commitments as an outcome.”
However, Evergreen noted AMP had taken steps to ensure team stability following the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and the proposed de-merger.
The fund aimed to achieve returns above the 10-year Australian Commonwealth Government bond yield plus 3.25% per annum after fees generated by income and capital growth. Strengths included access to large global institutional grade infrastructure assets, offering liquidity, global presence and scale and strong investment process.
Evergreen also said the fees on the fund, a 1.2% per annum management fee and 15.3% per annum performance fee for performance above the benchmark by investing in listed and unlisted infrastructure equities, were high.
“The fees of the fund are high considering 50% is allocated to a passive listed infrastructure portfolio, which cannot cost terribly much. We do acknowledge that the other 50% of the assets are deployed to a higher cost strategy of managing unlisted infrastructure and the need of this strategy to employ professionals,” the firm said.