The asset loss would have been greater without some strong inflows in other areas. For example, its $19 billion Thornburg Investment Income Builder mutual fund had net inflows of $2.7 billion in the first eight months of 2014, Lipper data show.
Thornburg, owned by its employees, does not release profit or revenue numbers. Garrett Thornburg, who founded in the firm in 1982, is chairman, but does not mange money.
Most asset owners employing Thornburg for international equities are sticking with the firm, said Brian McMahon, Thornburg's CEO and chief investment officer. He wouldn't name any.
Mr. McMahon said the personnel changes were made to help performance for both separate accounts and the mutual fund.
Mr. Fries, one of the portfolio managers, talked about the terminations, explaining consultants often react negatively to portfolio manager changes. “I can't say it's a surprise,” he said.
Mr. Fries said the previous three-person team structure hindered investment results because approval from all three managers was needed to buy or sell a stock. “We weren't making enough timely decisions ... we were having more discussion than action,” he said.
He said performance has improved since the changes, noting the international value mutual fund and separate accounts gained 2.9% between April 1 and Aug. 30, compared to the 2.1% return for the MSCI Europe Australasia Far East index. But they underperformed the 4.7% return of the MSCI All Country World ex-U.S. index. Mr. Fries said both benchmarks are used because of the broad international holdings in the strategy and fund.
Regardless of the index used, Thornburg executives concede that prior to April, underperformance against both benchmarks had been a problem for the past few years.
The firm's international equity strategy underperformed the MSCI ACWI ex-U.S. for the one-, three- and five-year periods ended June 30, according to eVestment. For the year, the Thornburg strategy composite returned 13.02% vs. 21.75% for the index.
For the three years, the composite had an annualized return of 3.58% vs. 5.73% for the index, and 10.35% annualized for five years vs. 11.11% for the index.
Portfolio manager changes at Thornburg are continuing. The firm issued a statement to institutional investors on Aug. 17, saying Ms. Trevisani will be leaving in March to spend more time with her family. Charles Wilson, another portfolio manager, will be assuming her duties. For the next six months, the two will co-manage the strategy.
In an interview, Ms Trevisani said working as portfolio manager is a “24-hour job,” and she decided recently that what she called an “extended sabbatical” would be in the best interest of her three children.
That announcement sparked some of the most recent international equity terminations. Trustees of the $14.1 billion Oklahoma Teachers' Retirement System, Oklahoma City, voted Aug. 27 to terminate Thornburg,
Tom Spencer, interim executive director, said in an e-mail. He said the board first put Thornburg “on alert” in November because of performance issues and decided to terminate the firm after the announcement that Ms. Trevisani would be leaving.
On that same day, the $14.6 billion Ohio Police & Fire Pension Fund, Columbus, also terminated Thornburg. Fund spokesman David Graham said the latest manager change led to the termination.
Officials at the $341 million Coral Gables Retirement System decided on July 31 to terminate the firm, which was before the announcement about Ms. Trevisani. The January portfolio changes and performance issues triggered the action, said Kimberly Groome, retirement system administrator
Minutes of the pension fund's July 31 investment committee meeting show that an unidentified research analyst for the fund's consultant, the Bogdahn Group, made a site visit to Thornburg and interpreted the change in portfolio roles as a sign of disagreement or some type of dissension among the portfolio managers.
Thornburg's Mr. McMahon said all team members worked well together and continue to do so in their new roles. He said the firm's research staff continues to support both the international strategy and mutual fund, ensuring a coordinated investment approach. n
Reporter Rick Baert contributed to this story.