As part of Aberdeen's acquisition of Artio, some international fund managers to depart. Also, a management change on a T. Rowe Price health-care fund, Columbia hires Putnam's former asset-allocation head, and ClearBridge and Legg Mason Capital Management funds to merge.
Artio Global Investors ART, parent of the advisor to a family of United States mutual funds, including Artio International Equity BJBIX, Artio International Equity II JETAX, Artio Total Return Bond JBGIX, and Artio Global High Income JHYIX, has agreed to be purchased by Aberdeen Asset Management, a global firm based in the United Kingdom. Aberdeen has more than $300 billion in assets under management and has made several acquisitions to diversify its fund lineup over the past 20 years.
The agreement, which is subject to approval by government agencies and shareholders of Artio Global Investors and Artio's mutual funds, calls for a purchase price of $2.75 per share. That's about 34% higher than Artio Global Investors' share price at the market's close on Feb. 13, just before the deal was announced.
Artio's share price has plummeted since shortly after it became independent from Swiss Bank Julius Baer in 2009. The stock was selling above $25 as late as April 2010.
The firm's international funds had attracted billions of dollars of assets in the mid-2000s owing to the stellar record of Artio International Equity since managers Rudolph-Riad Younes and Richard Pell took the reins in 1995. But the funds suffered a reversal of fortune, stringing together a multiyear stretch of poor relative performance that included 2012. Massive outflows from the two international funds reduced their combined asset base from a formidable $35 billion at the end of 2007 to roughly $2 billion now.
In response to the outflows, Artio Global Investors had shed employees over the past couple of years and had liquidated a small lineup of U.S. stock funds that had never attracted many assets.
The firm's bond funds have performed more impressively over the past five years, though Artio Global High Income did lag in 2010 and 2011. As a result, that fund and Artio Total Return Bond each contain more assets than either of the international funds. Global High Income has $2.9 billion in its coffers, while Total Return Bond has $2 billion.
According to the terms of the deal, the day-to-day managers of these bond funds will continue running them, joining Aberdeen. By contrast, Younes and Pell, who formally is listed as a manager on Total Return but is not its day-to-day manager, likely will be out, as Aberdeen personnel will take over the management of the international funds. The duo will continue to run the funds until the transaction officially closes, which Artio expects to occur by the end of this year's second quarter or early in the third quarter.
T. Rowe Price Health-Care Fund Manager to Depart
Kris Jenner of Gold-rated T. Rowe Price Health Sciences PRHSX will leave the firm on Feb. 15 to pursue other opportunities. Taymour Tamaddon, who has nine years of investment experience, will replace him. Since joining T. Rowe Price in 2004, Tamaddon has served as a health-care analyst covering hospital supplies, life sciences, and specialty pharmaceutical companies. He's also been a member of the investment advisory committee that oversees Health Sciences on a broad level.
Jenner's departure is a loss for the fund and firm. A doctor by training, he led Health Sciences to an 11% annualized gain since taking over in January 2000, often favoring smaller-cap biotech names with high growth potential. Many of his ideas fed into and boosted the returns of T. Rowe's diversified funds. For instance, Regeneron Pharmaceuticals REGN, a name Health Sciences has owned since 2007, was a big contributor to performance for several prominent T. Rowe funds in 2012.
Legg Mason, ClearBridge Funds to Merge
Four weeks after Legg Mason LM announced plans to merge the operations of its Legg Mason Capital Management subsidiary into another of its operating units, ClearBridge Investments, changes are already occurring at the two equity-oriented asset-management arms.
Legg Mason Capital Management All Cap SPAAX will merge with ClearBridge Large Cap Value SINAX on or around July 19, 2013, pending shareholder approval. It's unclear what the initial impact on All Cap shareholders will be. The multi-cap fund under current manager Jay Leopold had a mixed, but improving, record. Leopold, who will remain at the firm, was also the driving force behind the firm's risk management platform that was put in place in the wake of the 2008 downturn. The ClearBridge fund is a more pure large-cap offering and has a better long-term record. That said, All Cap shareholders should also see a price reduction--the ClearBridge fund's fees are 40% cheaper.
The announcement of the fund merger also comes amid Legg Mason's announcement on Feb. 13 that interim CEO Joseph A. Sullivan has been tapped to become the firm's permanent CEO and president. Sullivan had been interim CEO since Oct. 1 and had been at Legg Mason from 1993 until 2005 and again since 2008.
Columbia Swipes Former Putnam Asset-Allocation Head
Jeffrey Knight, former leader of Putnam's asset-allocation team, joined Columbia Management in a similar capacity, as head of global asset allocation. Knight will manage institutional strategies in addition to a lineup of asset-allocation and target-risk mutual funds with more than $4.8 billion in assets. Knight will serve under Columbia's chief investment officer, Colin Moore, who was also leading the firm's asset-allocation team. Columbia also removed Moore as a named manager of Columbia Global Opportunities IMRFX and the Capital Allocation target-risk funds, though Knight's arrival had not prompted any additional manager turnover as of Feb. 13.
Knight takes over as a manager of the $884 million Columbia Global Opportunities, which tallied middling performance in the trailing five years through January and suffered more than $1.1 billion in outflows during the same period. Knight will also manage the firm's Capital Allocation target-risk funds, which in aggregate have seen net outflows during the trailing five years. Additionally, Knight will manage Columbia Absolute Return Multi-Strategy CMSAX, Columbia Absolute Return Multi-Strategy Enhanced CEMAX, and Columbia Risk Allocation CRAAX.
Knight served at Putnam since 1993, keeping his team intact through the firm's tumultuous 2000s, which included regulatory issues, asset outflows, and manager and CEO exits. Knight's team managed more than $10 billion in fund assets, including Putnam's Dynamic Asset Allocation and target-date funds, and 529 plan offerings. Knight had a mixed record leading Putnam Absolute Return 500 PJMDX and Putnam Absolute Return 700 PDMAX. He fared slightly better as comanager of the firm's asset-allocation funds.
Goldman Sachs Asset Management Chairman Steps Down
Jim O'Neill, who has served as chairman of Goldman Sachs Asset Management for the past two years, is retiring this year. The economist served as a thought leader for the firm, providing global economic views that were discussed by the various fixed-income, equity, andasset-allocation teams. O'Neill famously coined the terms BRIC and Next 11 to group emerging- and frontier-market countries, which led to the launch of Goldman Sachs BRIC GBRAX in 2006 and Goldman Sachs N-11 Equity GSYAX in 2011. Goldman Sachs reportedly has no intention of finding a replacement for O'Neill. Tim O'Neill (no relation to Jim) has been co-head of Goldman Sachs Asset Management since mid-2008, while Eric Lane was promoted to co-head of the firm in December 2011.
Aberdeen Emerging Markets Shutters Its Doors to New Investors
Since its mid-2007 launch, Aberdeen Emerging Markets ABEMX has gathered money at a quick pace. With assets under management clocking in over $10 billion in early 2013, this fund is among the 10 largest diversified emerging-markets funds. So it was welcome news to see Aberdeen's fund board approve a soft close that will go into effect on Feb. 22, especially since the firm runs more than $30 billion in the strategy worldwide. In February 2012, the firm took a similar measure on the European-sold version of the fund in order to preempt asset bloat and allow it to deftly trade less-liquid emerging-markets stocks. The Australian-sold version of the fund remains open to all investors. As of the end of 2012, Aberdeen Asset Management ran more than $50 billion in emerging-markets strategies overall.
Senior fund analysts Karin Anderson, Sarah Bush, Katie Rushkewicz Reichart, and Gregg Wolper (who owns shares of JETAX) and fund analysts Robert Goldsborough, Shannon Kirwin, Flynn Murphy, and Rob Wherry contributed to this report.