US sustainability investor Calvert axes UK asset manager from sub-advisory role over performance

Calvert Investment Management, the US sustainable funds firm, has axed F&C Management as sub-advisor to one of its funds due to concerns over performance.

F&C had been sub-advisor to the Calvert International Opportunities Fund fund since its inception in May 2007. The $33.2m fund aims to generate long-term capital appreciation via holdings that meet sustainability and social responsibility criteria. It has returned -5.73% since launch, according to Calvert’s fund website.

“On September 13, 2011, the [fund’s] Board terminated F&C as the sub-advisor to the Fund,” Calvert said in a filing.

“This change was precipitated by concerns over changes to the investment team, and for performance challenges.”

Calvert said that F&C had underperformed “over the past year and half” due to personnel turnover on the investment team. F&C earned just over $239,000 (€177,000) in fees from the fund in the year to the end of September.F&C has been replaced by a multi-manager set up comprised of Trilogy Global Advisors, majority owned by Affiliated Managers Group, and Advisory Research, a subsidiary of Piper Jaffray & Co. Calvert said the approach would offer more flexibility and opportunity to achieve the fund’s objectives in different market environments.

It said the new set up also puts less onus on environmental, social and governance (ESG) matters with the managers.

“Although the sub-advisors’ investment strategies did not reflect environmental, sustainability and governance (“ESG”) criteria, the directors considered the impact ESG criteria was likely to have on the composition of the investment portfolios the sub-advisors would manage for the fund,” the filing says.

“Based on its review, the board concluded that appropriate action was being taken with respect to the fund’s performance.”