Ausbil announced late on Monday that it was suspending redemptions and applications for its $413 million Australian microcap equities fund for one month.
The announcement came after Ausbil announced on Thursday that the lead portfolio managers for the fund, Tony Waters and Chris Prunty, would be leaving the business after eight years to be replaced by co-head of equities John Grace and microcap specialist analyst Josh Clark.
Ausbil said it is in the process of recruiting a permanent replacement for Mr Waters and Mr Prunty, who have left for “lifestyle reasons” to manage family money and private assets.
Following the news of the personnel change, Morningstar downgraded its rating on the fund to negative, recommending that investors “look elsewhere” for Australian microcap exposure.
“Microcap investing is a highly specialised pursuit, so we think it may take some time for Ausbil to locate experienced replacements,” said Morningstar analyst Andrew Miles in his report.
“In the interim, the relatively less liquid nature of the underlying holdings mean there are significant downside risks.
“Consequently, we recommend unitholders look elsewhere for similar exposure,” Mr Miles said.
Zenith Investment Partners confirmed to InvestorDaily that it told its subscribers to redeem their units in the Ausbil microcap fund. Lonsec declined to comment.
In response to questions from InvestorDaily, a spokesperson for Ausbil confirmed that unitholders who have requested a redemption but have been affected by the suspension will continue to pay fees.
“Ausbil continues to professionally manage the fund and its underlying assets and therefore will continue to charge a management fee,” said the spokesperson.
“The fees are charged at a fund level and the responsible entity does not have the power under the constitution, nor under the law, to charge different fees to redeeming investors.”
Ausbil declined to comment when asked what percentage of the $413 million fund has received redemption requests.
The spokesperson said Ausbil has commenced discussions with a “shortlist of preferred candidates to recruit an additional professional”.
“Portfolio management has transitioned to John Grace, co-head of equities, who has been at Ausbil for 16 years and Josh Clark, microcap specialist analyst, who has been an analyst at Ausbil for five years and part of the microcap team for three years,” said the spokesperson.
“John Grace has had oversight of the microcap team since inception. The Portfolio Construction Committee (which includes [chief investment officer] Paul Xiradis and Gian Pandit, as well as John Grace) will, as always, continue to oversee the microcap fund.”
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