Steve Merlicek

In its consolidation of United Funds Management and MultiMix assets into a single $5.3 billion portfolio, IOOF Holdings has awarded two new investment mandates while terminating 16.


The rationalisation saw Merlon Capital Partners, a recent addition to Challenger’s boutique line-up, sign a $145 million mandate with IOOF for its domestic equities buy-write strategy, and Legg Mason Australian equities net a $100 million small-caps mandate.

But the consolidation, which IOOF CIO Steve Merlicek said was undertaken in order to achieve greater scale in the end entity’s investments, saw mandates terminated in all asset classes except alternatives and cash.

In Australian equities, Alleron Investment Management and SG Hiscock lost mandates from UFM as Concord Capital, Tyndall Investment Management and Northcape Capital were cut from the MultiMix portfolio.

This meant Solaris Investment Management, Integrity Investment Management, AllianceBernstein, Perennial and BlackRock joined Merlon and Legg Mason in the combined $1.8 billion Australian equities portfolio.

The Boston Company and Perpetual Investments were dropped from UFM’s international equities book, while GMO and Capital International lost business from MultiMix, which found itself short of a market neutral manager earlier this year when TechInvest closed down.

Now, IOOF’s $1.1 billion global equities exposure would be managed in an indexed-core, active-satellite structure with State Street Global Advisers being the passive manager and LSV Asset Management, Wellington Management and Axiom Investment Management running more specialised, high-conviction strategies and Pareto Partners running a currency overlay.

Among fixed interest managers, UFM let go of its internal high-yield fund along with Newton, while MultiMix pulled mandates with Aberdeen Asset Management and Morgan Stanley. PIMCO, Perennial and Loomis Sales now manage the combined portfolio’s $1.3 billion fixed income.

IOOF-owned boutique, Perennial, was cut from UFM’s international property book while INVESCO lost an international property mandate. However Perennial maintained its MultiMix property mandates and joined Challenger and Colonial First State in the new $144 million Australian property portfolio and Cohen &Steers in the $147 million international property portfolio.

IOOF’s $200 million in alternative investments, and its $640 million in cash with an internal UFM vehicle, were unchanged throughout the consolidation.

Even though the assets within MultiMix and UFM were now managed in one portfolio, creating the potential for scale and cost benefits, they would continue to be distributed under the different brands of MultiMix and United Sector Leaders.

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