Researchers at both the retail and wholesale level have reacted calmly to last week’s across-the-board portfolio manager reshuffle at almost $4 billion Milford Asset Management, which included the exit of founder and figurehead, Brian Gaynor, from day-to-day duties.
Ben Trollip, Melville Jessup Weaver (MJW) senior investment consultant, said Gaynor’s decision to step away from managing portfolios “had been well-signaled”.
“This clearly is a significant move but it’s not all that surprising,” Trollip said. “Brian needed a plan in place for the team to step up.”
Under the changes revealed by Milford last week, Gaynor would hand over control of the flagship Active Growth Fund to Jonathan Windust while Sam Trethewey would assume his responsibilities for the group’s NZ equities and trans-Tasman funds.
Trethewey, who was previously co-manager with Gaynor of the two funds, would work with Wayne Gentle, Milford head of Australian equities, in running the trans-Tasman fund. Windust has held a number of senior portfolio management roles at Milford including running the Diversified Income Fund as well as the balanced KiwiSaver and unit trust products.
David Lewis, Mark Riggall and Paul Morris will also take on greater portfolio management duties following the Milford revamp, due to take effect on April 1. Riggall, hired as central dealer in the wake of Milford’s 2015 run-in with the regulator over alleged market manipulation charges, will manage asset allocation for the firm’s balanced funds in addition to his current role.
Chris Douglas, Morningstar director of manager research ratings Asia-Pacific, said Milford had been “very transparent about the changes”.
Douglas said, with the exception of Riggall and Morris, who were relative unknowns for Milford at the senior portfolio level, the other promoted managers had proven track records at the firm.
In a statement, Gaynor, who will continue as Milford head of investments, said the “carefully developed succession plan will sustain and improve the performance of your funds and is in the best interest of clients”.
“My oversight, as well as our Portfolio Manager and Co-Manager structure, will continue to provide depth of expertise in our fund management capabilities,” he said in the statement.
Trollip said Gaynor’s ongoing guidance role in the Milford investment process would reduce some anxiety for investors.
“But clearly investors need to get comfortable with the new leadership team,” he said.
In other Milford news, the group’s recently-launched Private Equity II fund has made its first investment, stumping up $11 million – in a joint deal with the Active Growth Fund – for an 18.3 per cent share of Equipment Leasing and Finance (EL&F).
“The partnership share of this investment will be approximately $7.5 m, with the Active Growth Fund also investing $3.5m,” investors were informed last week.
It is understood, the Milford fund is buying the interests in EL&F from private equity firm Maui Capital.
EL&F, with reported annual revenues of $260 million, emerged last September following the purchase of Hellaby Holdings’ equipment business and merger with Advaro Finance (a Maui investment).
In a note to investors, Milford private equity managers Brooke Bone and John Johnston, said EL&F offered “good growth prospects” for the fund.
“We are pleased to have the opportunity, so soon after closing the fund raising, to be involved in purchasing a subsidiary of a large NZ corporate and combining it with a growth business to provide additional scale and opportunities,” the letter says.
Johnston has since been appointed to the EL&F board.
The Milford Private Equity II Fund closed its capital-raising early after securing its maximum target of $150 million last year.