The $300 million Castle Point Funds Management has replaced the global fixed income manager in its 5 Oceans Fund citing change of ownership concerns at incumbent Australian-based provider, Kapstream.
In a client note, Castle Point said it would replace Kapstream Capital with another Australian-based manager, the recently-launched Daintree, and T Rowe Price for the international fixed income allocation in the almost $30 million 5 Oceans fund.
Kapstream, founded in 2006 by former PIMCO head of Asia-Pacific, Kumar Palghat, was bought out last year by the newly-merged Janus Henderson “leaving the investment team with no equity in the business”, the Castle Point note says.
“We felt this led to poorer alignment and greater distraction for the key executives,” the Castle Point release says. “Also, assets under management has the potential to grow to quite a large number due to increased global distribution capabilities of the [Janus Henderson] group.”
The manager swap-out was one of the first for the 5 Oceans product, which Castle Point launched in 2016 as a balanced fund option to the retail market. As well as the global fixed income allocation, 5 Oceans invests in global equities fund, Acadian; AMP Capital’s Short Duration; the Kohinoor Pacific Fund – run by former NZ-based alternative investment firm, 36 South (now headquartered in London); and, Castle Point’s own Ranger Fund.
Daintree, headed by ex Kapstream head of credit, Mark Mitchell, would mesh well with the T Rowe Price fund, Castle Point says.
“T Rowe Price, although arguably better known for equities, has impressive bond capabilities and the Dynamic Global Bond strategy run by Arif Husain and his team (based in London and Baltimore) is, in our opinion, a very differentiated strategy,” the note says. “…It also has more of a sovereign focus which combines nicely with the credit focus of Daintree.”
Richard Stubbs, Castle Point partner, said the two new fixed income managers represent about 25 per cent of the 5 Oceans fund.
Stubbs said the Auckland-based firm, which emerged out of Tower Asset Management in 2013, had seen good growth in the retail market via its two portfolio investment entity (PIE) funds: 5 Oceans, launched in 2016; and, the absolute return-focused Australasian equities product, the $50 million plus Ranger fund.
And Castle Point is planning to build on that success with PIE version of its flagship Trans-Tasman strategy later this year.
“There are some capacity constraints among NZ equity managers in both the wholesale and retail markets,” Stubbs said. “The absolute return Ranger fund doesn’t suit all advisers, and some are asking us for to offer a more traditional NZ shares fund.”
The Castle Point Trans-Tasman wholesale strategy has returned 34 per cent and 24 per cent over the one-and three-year periods ending June 30 – topping the rankings in the Aon and Melville Jessup Weaver investment surveys over both time-frames.
According to Stubbs, the Trans-Tasman strategy has an effective track record of about eight years, dating back to its Tower origins.
“We hope to launch [the Trans-Tasman PIE] in October,” he said.