Manager Research

Nedgroup outsources the investment management of the Nedgroup Investments Global Cautious Fund to US based Chartwell Investment Partners as part of their “best of breed” approach to manager selection. We were informed on Friday that the two portfolio managers responsible for the fund, George Cipolloni and Mark Saylor, resigned from Chartwell last week.

Both George and Mark were part of the Killen Group before it merged with Chartwell in 2015. Our original concerns with the Killen Group before the merger and with the merged company under Chartwell was that there was no transfer of ownership to key investment teams, which makes it difficult to build long-term succession and to incentivise staff to remain in the business. Merging two distinct investment management businesses is also incredibly difficult and there is a high likelihood to be some instability in the period thereafter.

The resignation of the portfolio managers is a materially negative development. George has been a co-manager on the strategy since 2006 and Mark joined the investment team in 2007, so both have been involved with the management of the strategy for a long period of time. Therefore, the track-record of the Nedgroup fund since 2015, when Killen/Chartwell took over management from JP Morgan, is entirely attributable to the current portfolio managers. While George and Mark could leverage off the broader team and business for support, they were the core of this small team and we don’t have confidence that the remaining team has the depth to replace them at this stage.

In the interim, Nedgroup have reached agreement with Chartwell for George and Mark to continue to manage the fund according to the same mandate, philosophy and process as before, while a plan is being implemented to either replace Chartwell as the “best of breed” manager on the mandate or to find new portfolio managers within the broader existing team to manage the fund. The outcome of this process is expected to take several months.

To maintain a positive rating on the fund (i.e. Tier 1 or 2), we need to have comfort around all aspects of the fund across its 3 to 5-year investment horizon. We have therefore decided to place the fund under review until such time we have more clarity on what the future holds. Our team in the UK will be discussing the changes with the business in the near future, and we will keep you updated on any progress in this regard.

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