BNY Mellon Asset Management (BNYM) plans to close its wholly owned boutique Australian equities arm, Ankura Capital, in the first quarter of 2012.
BNYM managing director Bruce Murphy said Ankura, which has about $1 billion in funds under management, had not attracted enough institutional demand to sustain the business.
“We basically conducted a strategic review,” Murphy told InvestorDaily.
“We saw that, in the current market environment, there wasn’t the broad institutional support required to bring about sufficient scale, so we have reluctantly decided to close the business,” he said.
Ankura managing director Greg Vaughan and portfolio manager Jason Davis have worked together since1994 at Rothschild Asset Management.
The team of 10 – six investment managers and four analysts, compliance and administration staff – will not be redeployed elsewhere in BNYM, Murphy said.
“They will seek alternative roles in the Australian market,” Murphy said.
“Our focus at the moment is on our clients and coming up with an orderly transition for them,” he said, adding the transition would be complete no later than 31 March 2012.
Meanwhile, Standard & Poor’s Fund Services (S&P) has left its three-star rating of the Russell Enhanced Income Fund unchanged after learning that Ankura was set to close.
Ankura Capital was managing the equivalent of 19.5 per cent of the fund’s total portfolio, S&P said.
“Following notification, Russell Investment Management Ltd has repatriated that portion of the Russell Enhanced Income Fund portfolio managed by Ankura Capital,” S&P analysts Rodney Lay and Leanne Milton said in a statement.
“These monies have been invested in a separate mandate that largely replicates the Russell High Dividend Australian Shares Index and will remain so until a replacement fund manager is contracted,” they said.
Russell has started looking for a new manager, but the process could take months.
“The decision to retain the three-star rating is based on S&P’s view that, assuming a new manager is appointed over the shorter term, we do not believe the changes will adversely impact the manager’s ability to achieve the objectives of the fund,” they said.
