Axa Investment Managers
will acquire the remaining
25 percent of Axa Rosenberg
that it doesn't already own (see the two client letters Axa Rosenberg sent today below).
Axa Rosenberg co-founders Barr Rosenberg
and Kenneth Reid
hold the 25 percent
"The agreement notably provides that, over the next five years, Barr Rosenberg's and Kenneth Reid's economic interests will continue to be tied to the success of
the firm and the investment performance achieved for our clients, thus cementing a strong alignment of interests among stakeholders," one of the letters stated.
When the transaction is complete, Barr Rosenberg will leave the board and Reid will continue as a senior executive with the firm.
Word of the stake sale come on the heels of an April 15 letter Axa Rosenberg sent to clients in which it
discussed a coding error that it had first discovered in June 2009 and corrected between September and mid-November.
The mistake "affected the scaling inputs from our risk
model into our portfolio optimizer," company officials stated in the letter.
Last month, Schwab announced it will pull the plug on four Laudus Funds sub-advised by Axa Rosenberg
in mid-July. Schwab adopted Axa Rosenberg's mutual fund family in 2004 and retained the latter as sub-advisor.
Vanguard, another Axa Rosenberg client, said in late April that it is reviewing its relationship with Axa Rosenberg, which sub-advises three of its mutual funds.
Letter to clients from Stephane Prunet, global
chief executive officer, Axa Rosenberg
June 9, 2010
Over the past weeks, the external experts retained by AXA Rosenberg's Board have been working
diligently, with the support of our teams, on the matters noted in our April 15 letter.
We currently expect that the Board's review of the facts and circumstances surrounding the coding
error will be completed in the coming weeks. In addition, Cornerstone Research is employing a
methodology that involves analyzing common-factor risk exposures to estimate, on an account by
account basis, any potential performance impact due to the error. Barring unforeseen circumstances,
we anticipate that the assessment for several standard strategies will be completed by early July, with
clients being informed of their account-specific analyses as they are completed thereafter.
While those analyses are underway, the shareholders of AXA Rosenberg have reached an important agreement, which is detailed in the letter attached. We strongly believe that these are very positive
developments for AXA Rosenberg and our clients, and we are looking forward to discussing them
with you. We will also inform you, as a client, whether your consent is required in connection with this
We very much appreciate your continued support. We remain focused on our core investment
activities and are highly confident that the changes being announced today will reinforce and
strengthen the AXA Rosenberg platform for the benefit of our clients.
Global Chief Executive Officer
Letter from Axa Investment Managers CEO Dominique Carrel-Billiard and Axa Rosenberg co-founders Dr. Barr Rosenberg and Dr. Kenneth Reid
Dear Clients and Consultants,
As the shareholders of AXA Rosenberg, we have been operating in partnership for more than 10 years
with a shared long-term orientation. Throughout this time, our goal has always been to continually
strengthen AXA Rosenberg’s investment platform and secure the firm’s ongoing success on behalf of its
In this respect, we are pleased to inform you of an agreement we have concluded, which we believe will
provide an optimal governance framework to support the future development of AXA Rosenberg. The key
elements of this agreement are as follows:
In order to reinforce oversight and increase the interaction between senior management and the
Research Center, AXA Rosenberg's Director of Research will now report directly to AXA
Barr Rosenberg will relinquish his authority over the Research Center and will continue in his role
as a consultant to the company on an exclusive basis, reporting directly to the CEO.
In addition, we are taking the next steps in the succession of the firm’s ownership structure which have
been in discussion for some time. AXA Investment Managers will purchase the remaining 25% equity
interest in AXA Rosenberg from co-founders Barr Rosenberg and Kenneth Reid, subject to regulatory
approvals, as required, and other conditions. The agreement notably provides that, over the next five
years, Barr Rosenberg's and Kenneth Reid's economic interests will continue to be tied to the success of
the firm and the investment performance achieved for our clients, thus cementing a strong alignment of
interests among stakeholders.
Upon completion of this transaction, Barr Rosenberg will step down from the Board. Kenneth Reid will
continue as a Senior Executive at AXA Rosenberg.
We are confident that these developments will establish a strong framework for AXA Rosenberg’s
organizational evolution and preserve the key attributes of its investment platform, by:
Strengthening the firm's overall governance and management structure,
Reinforcing collaboration among the firm’s research and investment functions,
Further enhancing risk management, controls and oversight across the firm; and
Retaining the continuity of AXA Rosenberg’s core functions, investment process and knowledge
We look forward to continuing to meet your investment needs.
Chief Executive Officer
AXA Investment Managers
Dr. Barr Rosenberg
Dr. Kenneth Reid
Armie Margaret Lee
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