Bloomberg News

Martin Currie Loses $6 Billion of Assets in Three Months

November 16, 2011

(Adds decline of markets in first paragraph, details on fund manager departure in sixth paragraph.)

Nov. 8 (Bloomberg) -- Martin Currie Ltd., the Edinburgh- based fund company, lost more than a third of its assets in three months as markets declined and clients pulled money following the departure of an investment manager in China.

Assets under management stood at 6.4 billion pounds ($10.3 billion) as of Sept. 30, according to the company’s website. That was a drop of 3.7 billion pounds, or 37 percent, from the end of June and a decline of 43 percent from the end of 2010. Martin Currie plans to rebuild assets to more than 15 billion pounds in 2015, said Andy Sowerby, head of sales and marketing.

“We only do active equities so market behavior is a big part of the fall and there have been some changes to our China team that has impacted this specialist part of our business,” Sowerby, a member of the board, said in a telephone interview yesterday. “We are very positive moving forward.”

Martin Currie, founded in the Scottish capital in 1881 and specializing in stocks, struggled to keep business and win new clients since the onslaught of the global financial crisis. In May, the company said it was the subject of a regulatory probe in the U.S. that culminated in Chris Ruffle, a fund manager in China, ceasing to oversee money for the firm.

About 1.5 billion pounds of the drop in assets in the third quarter was due to market movements, 1.3 billion pounds of money related to China and the remaining 900 million pounds because of equity strategies and underperformance, Sowerby said.

Ruffle Leaves

Martin Currie said on May 5 it was in talks with regulators in Britain and the U.S. about an investment in a convertible bond issued by a Chinese maker of printer cartridges. The transaction may have lead to a conflict of interest, which was cleared up with the client, it said.

Chief Executive Officer Willie Watt said in a statement on July 28 that Ruffle, responsible for co-managing about 3 billion pounds of the company’s assets, would stop the following day as a consequence of the regulatory probe.

Ruffle, 53, who also ran an emerging-market hedge fund, denied any wrongdoing and said at the time he planned to start a new China fund after leaving Martin Currie.

The drop in assets and other personnel changes followed Martin Currie’s decision in 2009 to shift its focus onto global and emerging market stocks and withdraw products investing in the U.K. and Europe, Sowerby said.

‘Moveable Feast’

In April, Allan Macleod, managing director of sales, marketing and client services, left after 21 years with the company. Other departures have included Stewart Higgins, head of European stocks, Jeff Saunders, head of U.K. stocks, and Neil Robson, manager of global equities.

Robson, who worked alongside former Chief Investment Officer James Fairweather, left on Oct. 31 to join Threadneedle, according to the London-based company. John Pickard joined Martin Currie from UBS Global Asset Management as head of investment in October 2010.

The company currently employs 258 people, including 50 investment staff, according to its website. Numbers of employees are “always a moveable feast,” he said, adding that there are no plans for a job-cutting program.

“There is always some coming and going in a firm of our size,” he said. “We have clearly been recruiting.”

Rothschild Link

The firm is majority owned by its employees, with New York- based Crestview LLP and investment vehicles associated with financier Lord Jacob Rothschild owning about 25 percent, according to the company’s annual report for 2010.

Both investors are committed to Martin Currie’s long-term strategy, Sowerby said. The company expects to report a profit for this year, he said. It earned 8.9 million pounds after tax for 2010, a drop of 39 percent from a year before.

The Martin Currie funds registered in the U.K. and tracked by Morningstar Inc. show a mixed performance. Of the funds investing worldwide, the Global Energy Fund rose 1 percent over the past 12 months, while the Global Alpha fund fell 7.9 percent, according to data from the Chicago-based research firm. The average of 223 funds was a decline of 3.1 percent.

“We are ambivalent about Martin Currie and are not using any of their funds at the moment,” said Ben Yearsley, a financial adviser at Hargreaves Lansdown Plc in Bristol. “It’s not been a great few years for them. Funds that you think would be solid have been a tad disappointing.”

Fund managers worldwide have suffered from market turbulence in recent months caused by concern that a Greek debt default might spread contagion to Italy and Spain, causing investors to pull more money from funds.

The MSCI ACWI Index, a measure of stocks in both developed and emerging markets, posted a negative return of 17.9 percent for the third quarter, according to data compiled by Bloomberg.

Assets under management at Standard Life Investments, Edinburgh’s largest money manager, fell 4.6 percent in the third quarter. The company, which oversees a mix of stocks, bonds and property, oversaw 149.8 billion pounds on Sept. 30 compared with 157 billion pounds on June 30, according to filings.

--With assistance from Peter Woodifield and Lukanyo Mnyanda in Edinburgh. Editors: Rodney Jefferson, Dara Doyle

To contact the reporter on this story: Tim Farrand in Edinburgh at tfarrand@bloomberg.net.

To contact the editor responsible for this story: Rodney Jefferson at r.jefferson@bloomberg.net


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