Manager Research

Earlier this year we wrote a note highlighting the departure of Rashaad Tayob from ABAX. This note can be found here. Our conclusion then was that, despite Rashaad’s departure, ABAX remained a stable business with a long-standing fixed income process and philosophy. The remaining team was still broad and experienced. Within that context we retained a Tier 2 rating on the Nedgroup Flexible Income Fund, for which ABAX are the investment managers.

ABAX have subsequently made us aware of the unfortunate passing of Dean Marks. Dean was a long-standing key member of ABAX’s fixed income team. His loss raised further questions regarding both leadership and capacity issues within the team. We held a number of follow-up meetings with ABAX to better understand how acute these issues are. They have taken steps to address both issues with the hiring of Linda Smith, an experienced fixed income portfolio manager, as well as the naming of Philip Liebenberg as portfolio manager for ABAX’s income orientated mandates. Philip has also taken on leadership of the team and will be assisted by both Linda and Lara Dalmeyer in the management of funds.

Our expectation is that the ABAX income process will be simplified and more risk averse moving forward. Investors should expect fewer ‘racy’ instruments or allocations than would have previously made it into funds. This expectation is based upon both the reduced capacity within the team and an understanding of how Philip thinks about fixed income investments.

With this understanding we have retained the Tier 2 rating for the Nedgroup Flexible Income fund. We need to see the new team operate together for a longer period, as well as the capacity constraints addressed before gaining full comfort in the capability.