Manager Research

Prudential have reconsidered their approach to managing the succession of their outgoing CIO, Marc Beckenstrater.  In May 2016 they announced that Marc would be heading to the UK to help establish a global investment capability within parent company M&G, which would directly service the local Prudential business.  For the offshore component of Prudential this is a net positive, as Marc was instrumental in setting up many of the local investment structures.  However, the loss to the local team was the point which was perceived differently by Prudential and their clients.

Prudential were very conservative in communicating this to the market, providing 12 months’ notice to clients (the handover would take place over this period).  What has become clear is that investor uncertainty around the change trumps conservative communication.

Prudential previously saw the role of the CIO as one which was more than adequately covered within each respective team (equities, fixed income and multi-asset).  This is quite commonplace in many global investment businesses, where specialisation leads to investment autonomy within focussed investment teams, and no real need for a ‘global’ CIO.  Seemingly, clients are more comfortable in SA when they have a single point of accountability – the custodian of the investment process.  Going forward it was difficult to see how this investor need was going to be satisfied given the new arrangement. 

Our view is that the ownership of an investment process by an individual adds substantial value to any capability, whether it be specialist (eg. Investec) or some form of ‘house view’ (Prudential, Coronation, Allan Gray).  It assists with establishing consistent decision making, acting as a testing of ideas, and an enforcer of investment discipline.  Investment processes are also continuously evolving, and this needs focus and attention.  A CIO is generally best placed to perform this role.

David Knee has been appointed in Marc’s place as CIO as of 1 July 2016.  This will also be a phased in approach to managing the transition, where Marc will remain at Prudential until March 2017.  David will be familiar to most clients, as the current head of Fixed Income.  Going forward he will continue to head up this area as well as participate in the Asset Allocation committee.  Michael Moyle will now head the Asset Allocation Committee, with Johny Lambridis representing equities and Duncan Schwulst representing Property.  Chris Wood will continue to head up the Equity process.  Marc will be stepping down from his responsibilities on the Dividend Maximiser Fund which will now be managed by Ross Biggs with support from Craig Butters and Rehana Khan.

This is a very manageable change for Prudential.  Their investment process is not key man dependent, and given the depth of the team can accommodate the change in responsibilities well.