State Street has made the unusual move of going outside the firm in the recruitment of a new head for its funds management arm, State Street Global Advisors (SSgA).

SSgA has hired Scott Powers, the current chief executive of Old Mutual’s US-based funds management arm, to fill the position held in an acting capacity since January by James Phalen, who will return to head of international for investment servicing, research and trading. SSgA’s former chief executive, Bill Hunt, left in January after the company announced that it had made a $US618 million reserve provision to cover possible losses due to the sub-prime mortgage crisis. State Street said at the time that the performance of certain funds had prompted “customer concerns as to whether the execution of these strategies was consistent with the customers’ investment intent”. State Street as a group has shown a reluctance to recruit externally for the most senior positions, but has preferred to move its executives around the world as senior positions open up. Hunt, for instance, had been at SSgA since 1994, before being made chief executive in 2006. Powers, 48, is one of the most respected funds managers in the world, having specialised in the multi-affiliate model for Old Mutual for seven years and before that with rival multi-affiliate BNY Mellon for a similar period. He took over the critical US operation of Old Mutual after it had purchased the ailing assets of what had been the largest and most successful multi-affiliate firm, United Asset Management. He starts his new job in early May. Meanwhile, Thomas Turpin, the chief operating officer at Old Mutual in the US, will be acting chief executive until a successor for Powers is appointed.