Morningstar rerates Brook fund

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Despite the recent upheaval at Brook Asset Management, research house Morningstar now believes that its Tasman fund is an investible option.

Monday, July 12th 2010, 7:50AM 2 Comments

The recent departures of Portfolio Managers Chris Gaskin and Slade Robertson will have come as a blow to investors who had just come to terms with the losses of co-founders Simon Botherway and Paul Glass in 2008.

Long-time Senior Analyst Justin Edgar's decision to pursue a career outside the funds management industry has only made matters worse, and this disruption has understandably muted our confidence. This coupled with our concerns around redemptions and their impact on liquidity led us to initially downgrade this vehicle from 'Highly Recommended' to 'Avoid'.

Redemptions were not as heavy as anticipated, and on 6 June 2010 Brook announced the appointment of its former chief investment officer, Andrew South.

"This is a great coup for the firm, and helps pull the strategy back from the brink," Morningstar says.

 South was at Brook from 2004 - 08 so knows the firm and its clients well.

"We were concerned that he may be a little ring-rusty after two years outside the industry, but our conversations with him helped allay these fears. South knows this process well. He also has the backing of Portfolio Manager Andrew Mortimer, as well as analyst inputs from the long-tenured Michael Locke and Roy Cross.

"Brook is also in the process of recruiting a further research analyst to what is already a comparatively well-resourced team. South is currently taking a closer look at the portfolio's banking and resources exposures, and expects to have Tasman in the shape he wants within a month, although he notes that overall he is happy with his inherited positions."

"Given all these factors, we believe that the valuation-focused process, low stock turnover, and quality personnel make Brook Tasman an investible option.

 Prospective investors may however wish to give South time to get his house in order before investing - especially given the alternative, dependable, and stable trans-Tasman offerings out there.

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