Investors pulled some A$69m ($51m) from ESG funds managed by AMP Capital last quarter, according to figures from Morningstar – marking the fifth consecutive quarter of net outflows for the troubled Sydney-based asset manager’s sustainable funds range.
Morningstar’s Global Head of Manager Selection, Grant Kennaway, attributed the outflows to the loss of key investment staff at AMP Capital, and recent corporate instability.
“During the 12 months to 31 Dec 2020, AMP Capital changed CEO three times and experienced significant turnover within its senior leadership team,” he told RI. “Team stability has been an issue with numerous changes and restructurings throughout 2014-18. This trend continued with further investment staff departures throughout 2020. Therefore, team culture and morale are a concern for us.”
AMP Capital faced criticism last year over its decision to promote Boe Pahari to CEO, despite being aware of a sexual harrassment case against him. Pahari resigned from AMP Capital a year later, amid a slew of departures which included sustainability heads Ian Woods and Emily Woodland, and ESG portfolio manager Kristen Le Mesurier.
Research from the Australasian Centre for Corporate Responsibility last week concluded that incidents of sexual harassment “reveal significant future problems for companies in terms of profitability, labour costs, and stock performance”.
In March, A$1.3bn Australian pension fund Mercy Super announced to members it was pulling an undisclosed amount of assets from an AMP Capital-managed ESG fund, citing concerns over liquidity and “inappropriate culture within their senior management team”. This followed similar decisions by LGIAsuper, Legalsuper and ESSSuper to redeem their investments.
Despite such moves from investors, AMP Capital was last year named a ‘leader’ by the Principles for Responsible Investment, which recently appointed the firm’s Deputy CEO, David Atkin, as its new head. 2020 also saw an ESG high-conviction fund managed by AMP Capital included in a Citywire Selector ranking of top performing cross-border sustainability-focused funds.
As part of a plan to turn the group’s fortunes around, AMP announced the sale of AMP Capital’s global equities and fixed income business to Macquarie Asset Management earlier this year. AMP Capital will subsequently rebrand as a “a fully autonomous and focused private markets business” under the name ‘PrivateMarketsCo’. The acquisition will boost Macquaries’s AUM by $44bn to $530, “cementing Maquaries position as the largest Australian investment manager” according to a press release.
Commenting on the fund outflows, a spokesperson from AMP Capital said: “Earlier this year, we made the decision to progressively review and potentially close some of our multi-manager sustainable funds in line with our strategy to simplify the business and pivot focus on our private markets business.
“As a long-standing signatory to the PRI since April 2007, we remain committed to ESG and ethical investing across our remaining portfolio. We are very proud of being included in the PRI Leaders Group 2020 for excellence in responsible investment.”
The broader sustainable funds sector in Australia saw its second highest inflows on record in Q3, according to the Morningstar data. At $1.9bn, inflows were topped on by those of the previous quarter, which stood at $2.5bn.
Asset managers Vanguard and Australian Ethical currently dominate the market, accounting for 40% of all sustainable fund assets in the region.