Virtus Investment Partners, a boutique asset management shop, announced Monday that it will acquire 100% of credit specialist Stone Harbor Investment Partners.
Terms of the deal, expected to close by the end of the year, were not disclosed, said James Doyle, a Virtus spokesman, in an email.
Stone Harbor will continue to operate autonomously under its own name and will be Virtus' 11th investment manager affiliate.
Senior Stone Harbor employees have signed long-term employment agreements, including Peter Wilby, managing partner and co-CIO; James Craige, co-CIO and head of emerging markets; and David Torchia, head of multiasset credit and portfolio manager, a news release said.
"We view this as an incredibly positive event for our clients, business partners and our investment teams," Mr. Wilby said in the news release, adding "as part of a larger company, we can augment our fixed-income solutions for new and existing clients."
"Stone Harbor's institutional-quality emerging markets debt capabilities are well-respected among clients and consultants and highly complementary to our other fixed-income capabilities," said George R. Aylward, Virtus' president and CEO in the release.
As of March 31, Virtus' existing boutique managers managed a total of $168.9 billion, Mr. Doyle said.
Stone Harbor experienced a decline in worldwide assets under management primarily for institutional investors to $15.4 billion as of May 31.
That's down from $16.7 billion as of Dec. 31, 2020, and from $20.4 billion as of year-end 2019. Stone Harbor's most recent asset peak was $35.9 billion as of Dec. 31, 2016.
Stone Harbor's 2020, 2019 and 2016 AUM figures are from surveys the firm completed for Pensions & Investments' annual survey of money managers.
P&I reported a number of asset owner terminations of Stone Harbor over the past several years for performance reasons, including the $36.7 billion Indiana Public Retirement System, Indianapolis, which replaced the firm with Pacific Investment Management Co. for a $313 million active emerging markets debt strategy in December 2020.
In September 2020, the $9.4 billion Missouri Local Government Employees Retirement System, Jefferson City, terminated Stone Harbor for a $120 million emerging markets debt strategy and hired Aberdeen Standard Investment to replace Stone Harbor because of performance concerns.
A spokesman for Stone Harbor said in an interview that the firm experienced outflows from one of its largest investment strategies — local-currency emerging markets debt — beginning in 2016 as institutional investors lost confidence in the asset class and terminated the firm.
The source said Stone Harbor wasn't the only manager to lose assets, noting that about 80% of managers of local-currency emerging markets debt underperformed the most commonly used index — the J.P. Morgan Government Bond Index-Emerging Markets — at the time and for some years after.
The source said Stone Harbor is seeing new inflows as asset owners begin to re-enter the asset class.