Manager Research
all members of our manager research team have over ten years of investment experience.
We have decided to change the rating for the Cadiz Absolute Yield Fund from a Tier 1 to a Tier 2 fund. While we still believe that the fund is managed by a high quality team with a solid investment process, our concerns relating to the business are material enough that we believe Tier 2 is the appropriate rating at this point.
We still rate Bronwyn Blood, the portfolio manager, and the team managing the fund highly. In addition, we believe that their risk aware approach and the portfolio construction process followed is sound.
However, we are concerned regarding the continued business risk associated with Cadiz. The business has continued to experience outflows, particularly on the higher margin equity funds. The reduction in assets under management comes with a corresponding fall in profitability and related business pressures. The business has also seen certain senior staff changes, and while we don’t view these changes as directly material on the management of the fund, the potential for future staff losses will remain until the business stabilises. An environment of possible change and uncertainty is not ideal for investment management.
Tier 2 remains a positive rating and we would still recommend the use of this fund. We will monitor developments within the business closely over the coming months.
Cadiz Absolute Yield Fund rating change
29 Aug 2014