Australia's third-largest fund manager, MLC Ltd., has surprised the fund management industry by terminating County NatWest Investment Management, Melbourne, and appointing a large U.S. manager and a new untried firm with no formal track record.
MLC, a Sydney-based life insurance and superannuation company, uses a manager-of-managers approach for part of its assets. It offers a core, indexed equity portfolio, with active managers operating at the perimeter. It has $5.7 billion Australian ($7.4 billion U.S.) in pooled pension funds, of which about 35% is farmed out to other managers.
MLC terminated NatWest's management of up to $400 million of equities and divided its total equity funds among its parent, Lend Lease Corp. Ltd. (which runs the core portfolio), existing manager Maple-Brown Abbott Ltd., Los Angeles-based Capital International and Portfolio Partners Ltd. of Melbourne.
Portfolio Partners was formed by two former County NatWest managers, David Slack and Keith Ince, formerly head of Australian equities and an executive director, respectively, who left the firm several months ago to establish a new, boutique operation.
Mr. Ince was one of the founders of County NatWest in Australia; Mr. Slack joined soon after it formed. In the nine years since the firm was formed, it has grown to be one of the top 10 managers in Australia, with A$8 billion under management.
Capital International already runs some sizable Australian equity portfolios for Australian clients and Lend Lease investment director, Bill Webster, says it has an impressive track record.
Rival managers in Australia will be interested to see how Capital International's style - and the fact it does not have any analysts permanently in Australia - will stack up in comparison with local stock pickers. Now, Capital has been mainly known as an international manager for Australian clients. It is believed to have Australia substantially overweighted in its global portfolios, with holdings of more than 4.5% against an index weighting of about 1.6%.
MLC is known to be keen to push its diversification of managers approach into a slightly more aggressive stance.