Standard Life Investments' institutional clients are cautiously optimistic about the prospects for the firm's GARS portfolio, despite the departure of Euan Munro, the strategy's architect.
After it was announced in July that Mr. Munro, global head of multiasset investing and fixed income and member of the board at SLI, was leaving the Edinburgh-based firm to become the CEO of asset manager Aviva Investors in London, SLI was quick to name Guy Stern as head of multiasset and macro investing. Mr. Stern, with the firm since 2008, had been head of multiasset management.
“Our team-based culture means that Standard Life Investments is able to implement these changes with immediate effect with minimal disruption,” said Keith Skeoch, CEO of Standard Life Investments, in a statement issued at the time.
So far, clients and consultants are accepting that, with caution.
The $10.6 billion Orange County Employees Retirement System, Santa Ana, Calif., hired SLI in June to run $100 million in the global absolute return strategy. “OCERS is continuing to monitor the situation, however we believe that the transition of the leadership to Guy Stern who has been overseeing the day-to-day operations and portfolio management responsibilities of the global absolute return strategies to be positive,” Robert Kinsler, a spokesman for OCERS, said in an e-mailed statement. “Staff has not recommended a watchlist for Standard Life at the present time.”
The City of San Jose (Calif.) Police & Fire Department Retirement Plan, which awarded SLI $45 million to manage one of three global tactical asset allocation mandates at the end of January, has put the firm on watch, on the recommendation of its investment consultant, NEPC LLC.
“As a result of Mr. Munro's departure, NEPC's due diligence committee changed the rating of GARS internally from "no action' to "watch,' and we will continue to monitor the situation and reassess the due diligence rating should there be additional departures or large outflows from the strategy,” said an Aug. 20 NEPC memo to the board of the $2.9 billion city retirement plan.
The memo added, however, that NEPC was “not recommending any action at this time,” and that SLI “continues to be included in searches for clients contemplating adding GAA strategies to their portfolios.”