News of the departure of Chris Selth from the head of international equities at BT has not made a great impression on researchers Lonsdale Securities (Lonsec) and InvestorWeb.
Selth was replaced last Friday by Paul Durham who was head of BT’s global emerging markets between 1996 and 1999, and head of research and equities since then.
While Lonsec is “confident Durham will be a strong head of international equities”, it has downgraded its assessment of BT’s International Equity Fund from “recommended” to “approved” because of what it describes as “uncertainty” arising from Selth’s departure, not to mention the departures of CIO Andre Morony and head of Australian equities Rohan Hedley within the last 12 months.
Lonsec also mentions the change in investment style at BT in its move to curb some of its “disasterous” results in the last 12 to 18 months. This, says Lonsec, is reflected in a change of management style of BT’s Australian Share Fund.
Here it notes that while BT has historically been a “high alpha” manager, meaning its performance is characterised by periods of both excessive outperformance and excessive underperformance of the market, Lonsec now says that it has lost its sharpness in recovery and has adopted more risk controlled strategies.
“While BT still has the potential to outperform and underperform, it will probably not be to the degree it has in the past, or with the speed it has in the past,” Lonsec says.
Meanwhile, InvestorWeb’s assessment of Selth’s departure and Durham’s appointment is also one of caution, and the research house has placed a number of BT’s sector funds under review. These are: International Share Fund, American Growth Fund, European Growth Fund, Japanese Growth Fund, Asian Share Fund and TIME Fund.
InvestorWeb’s analysis focuses on the issue of personnel changes at BT rather than the funds themselves. Compared with Lonsec’s statement, InvestorWeb’s is more cynical of BT’s recent structural changes.
“While Selth indicated the decision [to leave] was based on a desire to pursue other interests, InvestorWeb views the decision more than simply co-incidental with the other changes to personnel and process that has occurred within the equities team,” it says.
It concludes bleakly: “Accordingly, we have little confidence in the structure of the group at this point of time.”
InvestorWeb believes that Selth’s role as head of international equities was “pivotal to the overall structure and strategy undertaken by the portfolio managers at the sector levels”, and appears to have adopted a wait-and-see approach as to the benefits of Durham’s taking up of the reins.
InvestorWeb looks at Selth’s departure as one of a series of changes which relates to new CIO Gary Symons who “appears to be stamping his authority on the group after making a number of changes to both process and personnel”.
The research house says it will be meeting with BT in the near term.
