Colonial First State (CFS) has lost its second senior small caps portfolio manager within two months.

Tom Plodr has followed his colleague Anthony Vourdanos out the door, leaving the recently appointed Peter McGann holding the baby.

Plodr and Vourdanos have not disclosed their destinations, but InvestorDaily has heard they plan to work together in the future.

Vourdanos will pack his desk this Friday, while Plodr is set to leave the firm in early October.

Research house Morningstar downgraded CFS's Core small caps strategy from an investment grade rating to 'hold' on the news.

"This is another blow for investors in this strategy...the quick succession of these departures, and the relative inexperience in small-caps investing of Vourdanos' replacement Peter McGann, mean that our confidence in this strategy has been compromised severely and we advise investors to look elsewhere," the research house said.

CFS has said it is seeking a replacement for Plodr and that it will also hire another analyst to the team.

"It's by no means certain that the firm will be able to hire top-notch replacements, given the current battle for talent in the funds management industry," Morningstar said.

"For those currently invested here, this could be a good time to re-examine your small caps exposure, while those considering placing money here should focus instead on our higher-rated strategies."

In August, CFS hired Marcus Fanning from Morgan Stanley as head of equities.

He replaced Simon Shields, who left in June to head up UBS's Australian equities division after the former boss, Paul Fiani, left to establish a boutique.