The Australian equities division of Legg Mason has recruited a small caps co-portfolio manager to help fulfil duties previously covered by Tony Pearce, who exited the business in late 2008 after a 26-year tenure.

Julian Mulcahy joined the manager 11 days ago from the sell-side of Citi as co-portfolio manager and research analyst. He will jointly manage the Australian Small Companies Trust with Shane Livingstone, who has directed the strategy since its inception in 1996 and worked at Legg Mason for more than 27 years.

Pearce, a specialist in analysing large cap consumer stocks who absorbed small cap portfolio management responsibilities towards the end of his career, retired in late November 2008 after 41 years in the industry.

“Julian focuses on small caps, so it’s not a direct replacement,” a spokesman for Legg Mason said.

“His large cap responsibilities have been absorbed by the team.”

In a statement, Reece Birtles, head of Legg Mason Australian Equities, said Mulcahy, who has focused on the small cap sector for 14 of his 21 years in the investment industry, would promote “stronger conviction” in stock positions.

In November 2008, the small companies trust held $63.9 million, down from more than $91 million in September 2008. For calendar 2008, it returned -50.4 per cent against the -53.2 per cent performance of its benchmark, the ASX Small Ordinaries index. Since inception, the fund has returned 7.0 per cent per annum, 2.7 per cent ahead of its benchmark.

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