Fund Management
Australia Sees Fund Management Exodus

Australia's funds industry has been hit by a wave of senior managers quitting their jobs. Since the beginning of 2007, 34 senior investment managers in Australia have resigned. Ratings agency Standard & Poor's described the moves as unprecedented, saying that at least 14 of the 38 funds it rates had been affected. Five managers - UBS Global Asset Management, Credit Suisse, Colonial First State, ING and Invesco -have lost more than one senior executive over the course of the year. Two fund managers have closed down entirely. Allianz RCM lost its head of Australian equities in March and then withdrew from the Australian equities market in April. Deutsche Asset Management was sold to Aberdeen Asset Management in June. S&P Australian-equity sector head Marcus Hanel said the job-swapping had the potential to affect the now massive pool of assets under management. Among the recent big names to move is Marcus Fanning, BT's former head of Australian equities and, more recently, Morgan Stanley's head of global capital markets. He has pulled out of the investment bank to move to Colonial First State as head of equities in the firm's global asset management division. Colonial has been searching since May, when Simon Shields left abruptly to head UBS Global Asset Management's team, following the exit of its head of equities, Paul Fiani. Many senior investment managers have exploited the soaring markets to start their own businesses. S&P found that of the 34 departures at senior level, 12 went to mainstream firms, nine dropped off the radar, and 13 went to boutique fund-management firms, in many cases their own. A running sore for the big fund managers is that they have not been able to offer the same equity incentives as their boutique counterparts. According to Mr Hanel, mainstream managers are fighting back in the war for talent, with some institutions, such as Perennial and BT, implementing boutique-style remuneration structures. A month ago Westpac announced that BT, its funds management arm, would be floated off as a separate division, to allow senior management an ownership share and a related slice of the profits. According to Axiss, Australia now holds the fourth largest pool of investment assets in the world at $850 billion, a legacy of compulsory superannuation saving. So far this year close to $100 billion has flown into managed funds, most of it in super, split $16.9 billion into wholesale funds, $32.2 billion into retail super and $38.6 billion into retail non-super. An estimated 40 per cent of those flows has gone into Australian equities.