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Rating:Ouch, Virtus: Even Subadvised Fundsters Can Get Burned By Stars Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, March 09, 2016

Ouch, Virtus: Even Subadvised Fundsters Can Get Burned By Stars

News summary by MFWire's editors

Yesterday a publicly-traded mutual fund shop felt the burn of a star PM departure ... from a different company.

Rajiv Jain
Vontobel Asset Management
Co Chief Executive Officer
Chris Dieterich of Barron's points out that Virtus Investment Partners' [profile] shares fell 13 percent yesterday to $84.42, their lowest level since August 2012. (The Nasdaq fell 1.2 percent yesterday, and the Dow fell 0.63 percent.) Virtus' pain follows the departure of a key PM from a subadvisor to four of Virtus' mutual funds.

On Monday Swiss multinational Vontobel revealed that at the end of May Rajiv Jain will step down as chief investment officer of the growth equity boutique within Vontobel's New York-based Vontobel Asset Management subsidiary "to realize [his] own entrepreneurial plans." Jain will hand the reins over to Matthew Benkendorf, who has worked alongside Jain for 17 years.

Here's where Virtus comes in. Four Virtus mutual funds with nearly $11.3 billion in combined AUM are subadvised by Vontobel Asset Management and PMed by Jain. That amounts to nearly 24 percent of Virtus' $47.4 billion in AUM (as of December 31).

All four funds in question have four-star ratings from Morningstar, and the three biggest have silver ratings, too. Those four Virtus funds are: the $9.3-billion Virtus Emerging Market Opportunities Fund, which debuted in 1997 and which Jain has PMed since 2006; the $1.8-billion Virtus Foreign Opportunities Fund, which launched in 1990 and which Jain has PMed since 2002; the $159.2-million Virtus Global Opportunities Fund, which launched in 1960 and which Jain and Benkendorf have PMed since 2009; and the $28.6-million Virtus Greater European Opportunities Fund, which launched in 2009 and which Jain and colleague Daniel Kranson have PMed since 2013. Benkendorf actually PMed the Greater European Opportunities fund when it launched in 2009 until the beginning of 2015.

Bloomberg and Reuters both point out that Vontobel's shares have taken a big hit after the news. Financial News also highlighted Jain's departure.

"It will never be possible to clearly determine just how much Vontobel's asset-management performance came from the team and how much came from Jain himself," Michael Kunz, an analyst with Zuercher Kantonalbank, tells Reuters. "But put simply, Rajiv Jain was the face of Vontobel asset management in New York."

Axel Schwarzer, head of the Vontobel Asset Management unit, praises Jain as "the bedrock for the firm's success over the past 22 years," while also talking up the firm's "strong succession planning."

"Matthew [Benkendorf] is a proven Portfolio Manager and respected leader of our firm," Schwarzer states.

"Matthew deeply endorses the Quality Growth Investment style and knows our portfolios intimately," Jain states. "He is ideally placed to step up now to head the Quality Growth boutique." 

Edited by: Neil Anderson, Managing Editor

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