Leadership manoeuvres at asset-management firm Stewart Investors have led ratings agency FundCalibre to downgrade three of the company’s funds in the field of emerging-markets debt.
As the firm announced on 9 November, seasoned manager Angus Tulloch will pass on Stewart Investors’ Asia Pacific Leaders portfolio to junior colleagues David Gait and Sashi Reddy.
In parallel, senior figure Jonathan Asante will relinquish the Global Emerging Markets Leaders Fund to Ashish Swarup and Tom Prew. Meanwhile, Prew will hand over his primary responsibility of the firm’s Latin America Fund to Dominic St George, while retaining a link as co-manager.
Announcing the changes, Stewart Investors said: “We are very much a team, united by one investment philosophy, in how we research companies and make decisions – but we have been equally committed to providing clarity around individual portfolio responsibility.
“We have no intention of changing that approach, nor of concealing these individual responsibilities behind a faceless committee. Our ambition is to continue to develop talented investors… In that regard, the business has never been better placed.”
However, that cut no ice with FundCalibre, which instantly removed its Elite rating from all three funds at the centre of the reshuffle.
In a statement, the agency’s managing director Darius McDermott noted that it has only been eight months since the firm rebranded itself from First State Stewart.
That took place amid a restructuring process that involved the company splitting in half, with its Edinburgh and Hong Kong offices becoming two separate firms and the Scottish branch taking the name Stewart Investors.
“This is very unsettling,” said McDermott. “The teams have only recently been split into two, and now we have some substantial changes with some very experienced lead managers now taking a back seat.
“We fully appreciate that the investment style and philosophy of the funds will not be changing,” he added, “but all managers do things slightly differently.” The newer members of the team, he stressed, “will have something to prove”.
FundCalibre’s decision to downgrade the funds based upon a series of management changes has highlighted a general climate of nervousness that prevails in the field of emerging-markets debt.
Earlier this month, Gordon Harding – investment specialist at asset handlers M&G – told FE Trustnet that economic conditions in the relevant territories are raising risk levels for investors.
“You've got Brazil where inflation is close to 10%, growth has actually moved into recession and the currency is weakening as well,” he said. “It is a similar situation in Russia and then in South Africa, there are similar issues. Turkey as well. These are all big emerging-market economies.
“Then,” he added, “to throw something else into the mix, you have China – which has been a big worry over the past few months and has been slowing down as well. This means the macro picture is looking quite poor for emerging markets and we think currency devaluation will continue.”
Harding did, however, strike a more optimistic tone for those who are prepared to weather the challenging terrain. “I think we will still see issues going forward,” he said, “but for investors who are able to accept a little bit of volatility then it could be a regional entry point over the longer term.”