Schroder Investment Management has shaken up its Asia fixed income business after the departure of division head Rajeev De Mello, with implications for the portfolio management team.
De Mello’s responsibilities have been split into investment and business components, similar to the approach under Schroders' equity franchise, said fund research firm Morningstar in a client note on Friday (March 2).
Roy Diao has been named Schroders' new head of Asian fixed income on the business side based in Singapore, having joined the UK fund house in mid-2017 from Oddo Asset Management. He will not have portfolio management responsibilities.
Diao had been Oddo's Singapore chief executive since 2012, when he was hired to spearhead the French firm's buildout in Asia. He left the company in December 2016, according to his LinkedIn page. Oddo declined to comment.
Portfolio managers Julia Ho and Angus Hui have taken combined leadership of De Mello's former investment responsibilities, said a Schroders spokeswoman.
Singapore-based Ho is responsible for Asian macro (interest rates and currency) as well as Singapore and China onshore strategies, while Hong Kong-based Hui looks after Asian and emerging-market credit.
The two will co-manage Schroders’ Asian local-currency bond fund and Asian bond absolute-return fund with Ang Chow Yang, with support from the team.
The changes took effect on February 21, when De Mello's regulatory licence with Schroders in Hong Kong ended.
His sudden departure came as a surprise and, according to Schroders, was primarily triggered by differences in view between De Mello and the firm about the strategic direction for the Asian fixed-income business, said Morningstar in its note.
Schroders declined to comment, apart from to say that De Mello had left to pursue other opportunities and that it has an experienced and capable team that is ready to further develop its fixed income business.
De Mello had started at Schroders in 2011, and under him the firm's Asia fixed income assets under management doubled from $6.5 billion in December 2011 to $13.2 billion by December 2017. AsianInvestor could not ascertain where he might be headed next.
For the time being, Ho and Ang will absorb De Mello’s research coverage on India, Indonesia and South Korea rates and foreign exchange. But there are plans to hire an Asian macro portfolio manager to replace De Mello’s research coverage in those areas and also to hire an Asian credit portfolio manager, said the spokeswoman.
Morningstar sees Ho’s and Ang’s combined experience across Singapore dollar, Hong Kong dollar, and China renminbi bonds as “helpful”, and noted that both had been working closely with De Mello.
However, it noted, “we believe that the two are stretched in terms of responsibilities, as they have taken up additional portfolio management responsibilities and absorbed De Mello’s research coverage”.
It will take some time for the investment team to fully digest De Mello's departure, and the possibility of further team turnover cannot be ruled out, added Morningstar.
Before joining Schroders, De Mello had been senior investment officer and Singapore country head at bond house Western Asset Management, part of US fund group Legg Mason. He has also served as head of Asian fixed income at Pictet Asset Management.
Schroders' Asia fixed income team is 18-strong, and the firm plans to add to its China onshore team in particular, both in interest rates and credit, said the spokeswoman. But it will face fierce competition from rivals also on mainland hiring drives.
Schroders has set up a wholly foreign-owned entity in Shanghai (with a branch in Beijing), won an onshore private fund management licence in December and had 10 onshore China staff as of early January.