The merging of UBS Brinson/ Brinson Partners' two domestic bond teams left consultants wondering which of the groups' strategies would win out.
The UBS shop, formerly UBS Asset Management, runs a duration-neutral, very risk-controlled portfolio, consultants said. Brinson Partners' style, however, has been more aggressive.
The moves are part of a greater restructuring of Brinson's fixed-income team following the merger of Brinson Partners' parent, Swiss Bank Corp., and Union Bank of Switzerland last summer.
Denny Hesse stepped down June 1 as co-head of global fixed income at Brinson Partners. He's retiring for personal and family reasons, a spokesman said.
Norman Cumming, former co-head with Mr. Hesse, will become the group's sole head and move to Chicago from London, reporting to Gary Brinson, chief investment officer.
UBS Brinson/Brinson Partners managed $49 billion in fixed-income assets for its global institutional clients at the end of March, a Brinson spokesman said.
In interviews, some domestic fixed-income clients said they were not concerned about the change, although a few are closely watching the new lineup.
"We definitely take a watch-and-see attitude," said Lorrie Tingle, deputy director, investments, for the $13.3 billion Mississippi Public Employees' Retirement System, Jackson. Brinson manages a $420 million domestic bond portfolio for the system. "We've been notified of all the changes and don't see any changes in the team that manage that portfolio," she said.
Consultants, however, wondered whether Brinson will run two different style portfolios.
"There's a nuance of difference" between the two groups, said Jeff Nipp, head of investment research for Watson Wyatt Investment Consulting in Atlanta.
He characterized Brinson's style as top-down, with a focus on duration and yield-curve management, while the UBS team was known for bottom-up, securities selection.
"The expected question (from clients) is, 'What does this mean for the product? Will I have the same product?' I don't know."
Brinson's Mr. Cumming acknowledged there were differences between the two, but said the integration of the Chicago and New York teams "will incorporate the strengths of both."
The firm is integrating its New York and Chicago U.S. investment-grade bond offices. Ranji Nagaswami, formerly of UBS, and Greg Smith, co-head, U.S. bonds, are co-heads of the new team. Ms. Nagaswami will be based in New York; Mr. Smith, Chicago.
Brinson has given greater weight to top-down, duration and yield-curve decisions, while UBS gave more weight to sector decisions and individual securities choices, Mr. Cumming said.
"The new integrated approach will try to respond to clients' risk preferences," he said.
"We're going to present the whole process to clients within the next couple of months," Mr. Cumming said. He added that "for clients on both sides, it's an evolution. The strong expectation is that clients won't see great change in how portfolios are managed."
The changes are not expected to bring layoffs.
Brinson has 97 investment professionals worldwide in fixed income.
Meanwhile, Joe Pratt and Mike Humphries will serve as co-heads of market allocation and strategy, reporting to Mr. Cumming. Mr. Pratt also will become deputy head of fixed income, while maintaining his responsibilities as a strategist.
Craig Hutson will direct credit research for U.S. investment-grade bonds in the global credit research team, and Lawrence Kemp, also from UBS, will lead high-yield research.
