Morningstar has downgraded the MLC Global Share Fund to investment grade from recommended on the back of uncertainty over its new portfolio manager and ongoing investment strategy.
“MLC has proven a more than capable global equities multi-manager, but potential process changes and a new portfolio manager mean that the future make-up of this offering is uncertain,” Morningstar analyst Julian Robertson said in a report.
Robertson said an uncharacteristic amount of change in recent years had marred the fund’s impressive long-term track record.
Global equities portfolio manager Paul Duncan resigned in September after 10 years with the company.
“Duncan was a high-calibre manager and a disappointing loss for the firm,” Robertson said.
“His second-in-command and long-time colleague Myooran Mahalingam temporarily took over management, inheriting a quality portfolio which did not require any major changes.”
However, MLC chose external candidate Jonathan Armitage to replace Duncan. Armitage is an 18-year veteran of Schroders in London, where his most recent role was head of US equities and global portfolio manager.
“We’re yet to meet with him, and so can’t put our unqualified stamp of approval on his investment skills and leadership ability, but note that having extensive direct equities investing experience won’t necessarily translate into multi-manager outcomes,” Robertson said.
However, he noted Armitage would have plenty of support, including from Mahalingam, who Robertson called “a pillar of stability”.
He said the appointment of Armitage begged a host of questions. “Armitage’s appointment raises questions about whether the strategy will be restructured, given sweeping changes within other MLC funds,” he said.
“It’s likely that Armitage will run a more actively managed portfolio. Manager changes are also possible, MLC having plenty of muscle to negotiate tailored mandates,” he said, adding the fund’s fees were above average for a multi-manager offering.
