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AMP Capital departures spark ratings concern

Tim Stewart
— 1 minute read

Key departures from AMP Capital have put the company’s management of property securities under a cloud, with one ratings agency announcing a downgrade and another issuing an ‘under review’ rating.

AMP Capital has announced that Tom Walker, deputy global head of global listed real estate, will be leaving the company next week “to pursue another opportunity”.

Mr Walker joined AMP Capital eight years ago before transferring to the London team.

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His departure follows that of head of European listed real estate Hugo Machin early this month, as well as the departure of portfolio manager Nikita Johal in August 2013 (who was not replaced).

AMP Capital now has no investment staff in London covering listed real estate – although the firm has indicated that the departures may result in the relocation of one existing team member to London as well as the hiring of an external candidate to be based in London.

Zenith Investment Partners reacted by placing the AMP Capital Property Securities Fund and the AMP Capital Listed Property Trust ‘under review’.

Speaking to InvestorDaily, Zenith analyst Jonathan Baird said the ‘under review’ rating was above a ‘redeem’ rating – but it indicates that investors should not be adding to their holdings.

Zenith has met with all three managers and held each in high regard, he said – but given Mr Walker’s seniority his departure is “the most significant”, said Mr Baird.

“The three departures combined have resulted in the loss of the complete regional team which adds to the magnitude of the changes,” he said.

“These departures have placed a heightened level of concern over not only the European team, but the broader team given the possibility of staff relocation,” said Mr Baird.

SQM Research went as far as downgrading the AMP Capital Global Property Securities Fund from 4.25 to four stars.

“SQM Research is concerned that the departures are a result of budget cuts incorporated throughout the broader AMP Capital organisation, however SQM Research is currently in the process of reviewing the departures and the fund as part of its 2014 Global Property Securities Review,” said SQM in a statement.

Under SQM’s rating structure, four stars still indicates a ‘superior’ fund that is “suitable for inclusion on most [approved product lists]”.

A spokesperson for van Eyk said her organisation would not be downgrading the AMP Capital fund, and will continue its endorsement of SQM’s rating.

van Eyk outsources listed property research to SQM and then provides its own ‘endorsed’ or ‘not endorsed’ overlay, she added.

The Morningstar fund research team is currently “assessing the implications” of Mr Walker’s departure and will be meeting with AMP Capital to discuss the matter tomorrow.

A spokesperson for AMP Capital said the firm has commenced a “global external and internal recruitment process to secure the right investment talent”. 

“In the meantime, the European portion of the team’s coverage and exposures will be managed by existing secondary analysts in Europe along with the whole 12-strong global listed property investment team,” said the spokesperson.

“We remain committed to our strong global listed real estate capability, which AMP Capital helped to pioneer more than 10 years ago, and the team remains focused on delivering outstanding performance and world-class listed real estate products and solutions,” she said.

 

AMP Capital departures spark ratings concern
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