Foundation QuayStreet portfolio managers, Roy Cross and Andrew South, will leave the business ahead of its impending takeover by the NZX-owned Smartshares.
QuayStreet told clients in a note that the duo “have decided not to transition over to Smartshares” following employment offers made to all staff.
Cross will remain with Craigs until March to help manage the changeover while South departs when Smartshares takes control in late February.
South and Cross both joined QuayStreet at inception in 2014 following long careers at seminal NZ boutique, Brook Asset Management.
The NZX bought the $1.6 billion QuayStreet funds operation for over $31 million from current owner Craigs Investment Partners last November in a deal due to settle on February 23.
Under a new reporting structure, Smartshares CIO, Stuart Millar, will assume overall responsibility for the QuayStreet funds, replacing South in the top investment strategy role.
Australian fund research house, ResearchIP, dropped its ratings on QuayStreet funds in the wake of the recent portfolio manager moves.
The researcher says the active management style of the funds “has not been Smartshares’ core business until the QuayStreet acquisition” despite Millar’s “long track record in managing active fund managers, previously at ANZ”.
But the exit of the key portfolio managers has triggered a reshuffle across the QuayStreet team with Ross Hunt set to take over the fixed income duties from Cross while Xavier Waterstone will manage the Australasian equities portfolios previously headed by South.
Smartshares senior portfolio manager diversified funds, David Taylor, will also step into the QuayStreet breach, the client note says.
Taylor “will add Andrew South’s management of the Conservative Fund, Balanced Fund and the Growth Fund to his current diversified fund responsibilities, this will include tactical and strategic asset allocation”.
Stefan Stevanovic, meanwhile, continues as QuayStreet head of global shares.
“The investment management team will be strengthened with additional roles to support the international equity approach plus a specialist investment operations team will be established,” the QuayStreet note says.
Smartshares plans to hire a global bonds senior portfolio manager and a quantitative specialist as well as several other more junior roles.
NZX chief, Mark Peterson, said last November that “the QuayStreet funds will be offered as a premium product set and will complement Smartshares’ existing systematic and passively managed product offering”.
All 10 of the QuayStreet retail funds and the group’s $260 million-odd KiwiSaver scheme will shift to NZX ownership.
“In time, Smartshares, with input from Craigs and clients, will work to align and refine the products to ensure the funds continue to meet customer needs and represent good value for money. Smartshares will also explore listing the QuayStreet funds,” Peterson said.
Smartshares chief, Hugh Stevens, resigned last week with his five-year plus tenure set to end this June. Peterson, too, has scheduled an exit from the NZX in April 2024.