Another year is coming to an end, and Australia’s boutique fund managers are still as attractive as ever to wayward employees of their larger competitors.
The most recent defection concerns nine members of Suncorp-Metway’s equities investment team.
In November, Suncorp’s entire equities team quit to join Pinnacle, an arm of Wilson HTM Investment Group, prompting funds rating group Morningstar to downgrade Suncorp’s Aussie equities offering to ‘avoid’.
Once bonuses have been paid out, the chances are that other fund managers will make a dash for the growing boutique sector too.
Money is likely to be the primary impetus for change. Experts say a good portfolio manager in an equity house should be getting somewhere between AU$750k and AU$1m base in this market, plus anywhere up to two times that in bonuses as well as lock-in incentives.
Managers who get substantially less than this are liable to quit.
However, Lee Humphrey, a principal in the investment management practice at Derwent Executive, says larger houses with the security to ride out tougher times may get the edge over boutiques if markets take a dive in 2008: “There’s been a consistent pattern of moves to boutiques all year but we’re now beginning to see a shift back to the larger institutions.”